CFPB, DOJ Caution Financial Institutions About Immigration Status Discrimination

The CFPB and the DOJ recently issued the “Joint Statement on Fair Lending and Credit Opportunities for Noncitizen Borrowers under the Equal Credit Opportunity Act” (the Statement).  The Statement cautions financial institutions that denying credit to applicants based solely on immigration status, or due to “unnecessary or overbroad reliance on immigration status,” may violate laws, including antidiscrimination provisions of ECOA.

The Statement says that ECOA does allow immigration status to be considered in credit decisions “when necessary to ascertain the creditor’s rights regarding repayment.”  But, if a creditor is considering immigration status beyond this, the credit decision may result in discrimination on a prohibited basis under ECOA and Regulation B. Some examples given in the Statement with regard to conduct that may violate ECOA and Regulation B include:

• Never considering applications from individuals who are within certain groups of noncitizens regardless of any individual’s credit qualifications;
• Overbroad consideration of criteria that implicates immigration status (e.g. number of years the applicant has held a Social Security Number); and
• Application requirements that only apply to certain groups of noncitizens, if not necessary to determine ability to repay.

The Statement notes ECOA’s consumer and fair lending protection purposes, and the associated legal obligations on creditors when making credit decisions for noncitizen borrowers.