GOP Senators: Lending Guidance Based on Immigration Status Is Irresponsible

Senators call on CFPB, DoJ to withdraw controversial guidance.

David Baumann


Nov 1



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David Baumann

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David Baumann

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Contending that the CFPB and the Justice Department abandoned decades of immigration policy, Senate Republicans are calling on the agency to withdraw their “irresponsible” guidance stating that lenders cannot take immigration status into account when making lending decisions.

“The CFPB and DOJ’s joint directive not only flies in the face of responsible lending standards, risk-based pricing, and sound risk management, but also contradicts and rewrites decades worth of guidance from the CFPB and the federal banking regulators—all without an official rulemaking pursuant to the Administrative Procedures Act (“APA”), giving financial institutions the chance to comment, or even offering any other semblance of advanced notice,” Republicans on the Senate Banking Committee wrote in a letter to the agencies this week.

What the Guidance Says

Last month, the two agencies issued the guidance, saying that they have received reports that potential borrowers with good credit records are being denied credit based on their immigration status.

“All credit applicants are protected from discrimination on the basis of their national origin, race, and other characteristics covered by the Equal Credit Opportunity Act, regardless of their immigration status,” the agencies said.

They added, “creditors should be aware that unnecessary or overbroad reliance on immigration status in the credit decisioning process, including when that reliance is based on bias, may run afoul of ECOA’s antidiscrimination provisions and could also violate other laws.”

They said that some companies have a blanket policy of denying credit to people based on their immigration status.

“The CFPB will not allow companies to use immigration status as an excuse for illegal discrimination,” CFPB Director Rohit Chopra said.

At Odds With Guidelines

However, the GOP senators said that the CFPB and DoJ guidance is at odds with the guidelines for various federal lending programs, many of which require U.S. citizenship or permanent residency to qualify.

“A borrower’s likelihood of repayment significantly falls if there is no guarantee that they will be residing in the same community, let alone the same country or legal system,” they wrote.

They also criticized the agencies for not using the federal rulemaking process, which would have allowed feedback from industry.

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