The Consumer Financial Protection Bureau and Department of Justice announced they have withdrawn a joint statement regarding creditors' consideration of immigration status under the Equal Credit Opportunity Act, reversing guidance issued during the previous administration that warned such practices could violate fair lending laws.
The original October 12, 2023 joint statement had cautioned that creditor policies related to an applicant's immigration or citizenship status could violate ECOA's and Regulation B's prohibition of discrimination based on protected classes, including race and national origin. The agencies said they withdrew the statement to avoid conflict with the express language of ECOA and its implementing regulation.
The withdrawal allows lenders to consider immigration or citizenship status in several circumstances, including when necessary to assess creditworthiness, protect creditor rights and remedies regarding repayment, avoid financial risks, and comply with other laws. The agencies said the withdrawal would also address any misimpression about liability under 42 U.S.C. § 1981 and avoid unnecessary compliance burdens.
The action represents a significant shift in fair lending enforcement priorities under the new administration, moving away from the previous administration's more restrictive interpretation of when immigration status could be considered in credit decisions. ECOA and Regulation B have long permitted creditors to consider pertinent elements of creditworthiness and information necessary to protect their legal remedies.
"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 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 the withdrawal reflects the administration's commitment to "avoiding statements that could confuse the law or imply compliance standards for civil rights laws that lack any statutory or regulatory basis." She characterized the move as "restoring alignment with established federal civil rights law rather than continuing the prior administration's ideologically-driven departures."
The withdrawal provides immediate clarity for lenders who had been navigating potentially conflicting guidance about when immigration status could be considered in credit decisions, though fair lending advocates may view the change as weakening protections for immigrant borrowers seeking access to credit.