On January 12, the CFPB and DOJ withdrew their October 2023 joint statement addressing how creditors’ consideration of immigration or citizenship status may intersect with the ECOA. The joint statement, published in the Federal Register on October 18, 2023, had cautioned that certain creditor policies affecting noncitizen borrowers could, in some circumstances, raise fair lending concerns.
In withdrawing the statement, the agencies emphasized that it was nonbinding and did not accurately interpret ECOA or Regulation E. According to the agencies, the statement may have created the misimpression that ECOA limits a creditor’s ability to consider immigration or citizenship status when evaluating applications for credit. The agencies clarified that existing law permits creditors to consider such information for legitimate underwriting and risk management purposes, so long as it is not used to discriminate on a prohibited basis, and that no additional limitations exist under ECOA.
The agencies’ notice highlights several key clarifications underlying the withdrawal, including:
- Permissible consideration of immigration status. ECOA does not prohibit creditors from considering an applicant’s immigration or citizenship status, provided that such information is not used to discriminate on a protected basis.
- No new limitations imposed by prior guidance. The joint statement may have suggested that ECOA or its implementing regulations impose restrictions beyond the statutory text, which the agencies now expressly reject.
- No requirement for uniform underwriting approaches. ECOA does not mandate a one size fits all approach to underwriting noncitizen applicants, and creditors may consider additional information.
Putting It Into Practice: The withdrawal continues a broader recalibration of the CFPB’s approach to ECOA interpretation (previously discussed here). While the withdrawal does not alter ECOA’s substantive protections, it reinforces a narrower view of how fair lending risk is articulated and enforced at the federal level. Institutions should continue monitoring how this shift affects supervisory and enforcement priorities, particularly as the Regulation B proposal moves forward.
