Texas Border Business
Texas Border Business
The Department of Justice and the Consumer Financial Protection Bureau announced that they have withdrawn a joint statement issued in October 2023 that addressed how lenders may consider an applicant’s immigration or citizenship status when making credit decisions. The agencies said the withdrawal is intended to avoid confusion and to better align with the existing language of federal law.
The original joint statement warned that lender policies involving immigration or citizenship status could, in some situations, violate the Equal Credit Opportunity Act and its implementing rule, known as Regulation B. Those laws prohibit discrimination in lending based on protected characteristics such as race and national origin. At the time, the agencies cautioned that certain practices could raise legal concerns.
In their announcement, the agencies said they are now reversing that position because the statement could be read as conflicting with the law itself. According to the agencies, the Equal Credit Opportunity Act and Regulation B have long allowed lenders to consider immigration or citizenship status when it is relevant to creditworthiness or necessary to protect the lender’s legal rights.
“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,” said Assistant Attorney General Harmeet K. Dhillon of the Justice Department’s Civil Rights Division. She added, “This administration is restoring alignment with established federal civil rights law rather than continuing the prior administration’s ideologically-driven departures.”
Officials emphasized that the withdrawal does not change the underlying law, but rather clarifies how it should be understood. The agencies stated that lenders may legitimately consider immigration status in several circumstances, including when it is needed to manage financial risk or to comply with other legal requirements.
“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 Russell Vought, Acting Director of the Consumer Financial Protection Bureau. “We are correcting the last administration’s attempt to ignore these well-accepted and common-sense principles of our nation’s fair lending laws.”
The agencies also said the withdrawal was meant to address concerns that the 2023 statement could be misinterpreted as expanding legal liability under another civil rights statute, 42 U.S.C. § 1981, beyond what courts have recognized. In addition, they cited a desire to avoid placing unnecessary or increased compliance burdens on lenders.
In their closing explanation, the agencies said the decision reflects their view that clear and accurate guidance is essential. They emphasized that lenders must still follow fair lending laws, but should not be left uncertain about practices that the law has historically permitted.
