The October 12, 2023 joint statement had cautioned that creditor policies tied to immigration or citizenship status could, in certain circumstances, run afoul of ECOA's and Regulation B's prohibition on discrimination based on protected classes such as race and national origin, according to the announcement.
The agencies said they pulled the guidance "to avoid any conflict with the express language of ECOA and its implementing regulation, Regulation B."
"For decades, ECOA regulations have permitted lenders to consider a borrower's lawful residence status and other information necessary to protect their rights and remedies with respect to repayment," said CFPB Acting Director Russell Vought. "We are correcting the last administration's attempt to ignore these well-accepted and common-sense principles of our nation's fair lending laws."
Assistant Attorney General Harmeet K. Dhillon of the Justice Department's Civil Rights Division said in a statement: "The federal government is committed to avoiding statements that could confuse the law or imply compliance standards for civil rights laws that lack any statutory or regulatory basis. This administration is restoring alignment with established federal civil rights law rather than continuing the prior administration's ideologically-driven departures."
The agencies said ECOA and Regulation B permit creditors to consider "pertinent elements of credit-worthiness and information necessary to protect creditor rights and remedies," including a borrower's immigration or citizenship status. Withdrawal was appropriate, they said, to avoid confusion that lenders may legitimately consider immigration status in several circumstances, including to avoid financial risks and to comply with other laws.
The agencies also cited a need to address "any misimpression that the joint statement interprets 42 U.S.C. § 1981 to confer any liability under the statute that has not already been recognized by courts," and to avoid "any unnecessary burdens from new or increased compliance efforts."