Notice2023-22968
Joint Statement on Fair Lending and Credit Opportunities for Noncitizen Borrowers Under the Equal Credit Opportunity Act
Primary source
Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
October 18, 2023
Issuing agencies
Consumer Financial Protection Bureau
Abstract
The Consumer Financial Protection Bureau (CFPB) and the Department of Justice (DOJ) have released a joint statement to assist creditors and borrowers in understanding the potential civil rights implications of a creditor's consideration of an individual's immigration status under the Equal Credit Opportunity Act (ECOA).
Full Text
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<title>Federal Register, Volume 88 Issue 200 (Wednesday, October 18, 2023)</title>
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[Federal Register Volume 88, Number 200 (Wednesday, October 18, 2023)]
[Notices]
[Pages 71845-71847]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2023-22968]
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CONSUMER FINANCIAL PROTECTION BUREAU
Joint Statement on Fair Lending and Credit Opportunities for
Noncitizen Borrowers Under the Equal Credit Opportunity Act
AGENCY: Consumer Financial Protection Bureau.
ACTION: Notice of joint statement.
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SUMMARY: The Consumer Financial Protection Bureau (CFPB) and the
Department of Justice (DOJ) have released a joint statement to assist
creditors and borrowers in understanding the potential civil rights
implications of a creditor's consideration of an individual's
immigration status under the Equal Credit Opportunity Act (ECOA).
DATES: This information is current as of October 12, 2023.
FOR FURTHER INFORMATION CONTACT: Sonia Lin, Office of Consumer
Populations, <a href="/cdn-cgi/l/email-protection#8dfee2e3e4eca3e1e4e3cdeeebfdefa3eae2fb"><span class="__cf_email__" data-cfemail="7c0f1312151d521015123c1f1a0c1e521b130a">[email protected]</span></a>. If you require this document in an
alternative electronic format, please contact
<a href="/cdn-cgi/l/email-protection#04474254465b4567676177776d666d686d707d44676274662a636b72"><span class="__cf_email__" data-cfemail="81c2c7d1c3dec0e2e2e4f2f2e8e3e8ede8f5f8c1e2e7f1e3afe6eef7">[email protected]</span></a>.
SUPPLEMENTARY INFORMATION: The Consumer Financial Protection Bureau
(CFPB) and Department of Justice (DOJ) (collectively, the agencies)
jointly issue this statement \1\ to assist creditors and borrowers in
understanding the potential civil rights implications of a creditor's
consideration of an individual's immigration status under the Equal
Credit Opportunity Act (ECOA). ECOA does not expressly prohibit
consideration of immigration status, and, as explained further below, a
creditor may consider an applicant's immigration status when necessary
to ascertain the creditor's rights regarding repayment. However,
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.
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\1\ This document is for informational purposes only. It does
not impose any legal requirements, nor does it restrict the
agencies' exercise of their authorities or confer rights of any
kind, and it is not enforceable.
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I. ECOA and Regulation B
The agencies are charged with enforcing the antidiscrimination
provisions of ECOA, requirements that are essential for ensuring fair,
competitive and nondiscriminatory lending markets.\2\ ECOA prohibits
discrimination by a creditor in any aspect of a credit transaction, on
the basis of race, color, religion, national origin, sex (including
sexual orientation and gender identity), marital status, age, an
applicant's receipt of public assistance, or the good faith exercise of
an applicant's rights under the Consumer Credit Protection Act. 15
U.S.C. 1691. Discouraging applications for credit on a prohibited basis
is also prohibited.
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\2\ The CFPB enforces ECOA with respect to any person subject to
ECOA's coverage, with limited exclusions under the Consumer
Financial Protection Act. 15 U.S.C. 1691c(a)(9). The DOJ enforces
ECOA where there is evidence of a ``pattern or practice'' of
discrimination. 15 U.S.C. 1691e(h).
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ECOA is implemented by regulations found at 12 CFR part 1002,
commonly known as ``Regulation B.'' ECOA and Regulation B apply to all
types of credit, including both personal credit and business credit.
Among other things, Regulation B sets forth ``[r]ules concerning
evaluation of applications'' for credit. 12 CFR 1002.6. Under
Regulation B, creditors shall not consider race, color, religion,
national origin, or sex in any aspect of a credit transaction. 12 CFR
1002.6(b)(9).\3\ Subject to that restriction, ``a creditor may consider
any information obtained, so long as the information is not used to
discriminate against an applicant on a prohibited basis.'' 12 CFR
1002.6(a).
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\3\ The list of prohibited bases in 12 CFR 1002.6(b)(9) does not
include all characteristics protected under ECOA. The limited
circumstances for considering certain other prohibited bases, such
as age and marital status, are discussed elsewhere in 12 CFR
1002.6(b).
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Thus, while ECOA and Regulation B do not expressly prohibit
consideration of immigration status, they do prohibit creditors from
using immigration status to discriminate on the basis of national
origin, race, or any other protected characteristic.\4\ Regulation B
notably
[[Page 71846]]
provides that a ``creditor may consider [an] applicant's immigration
status or status as a permanent resident of the United States, and any
additional information that may be necessary to ascertain the
creditor's rights and remedies regarding repayment.'' 12 CFR
1002.6(b)(7). Regulation B does not, however, provide a safe harbor for
all consideration of immigration status.
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\4\ See Espinoza v. Farah Mfg. Co., 414 U.S. 86, 92, 94 (1973)
(noting that title VII, which prohibits employment discrimination,
``prohibits discrimination on the basis of citizenship whenever it
has the purpose or effect of discriminating on the basis of national
origin''). Courts have generally interpreted prohibitions under
title VII and ECOA consistently. See, e.g., Garcia v. Johanns, 444
F.3d 625, 632 (D.C. Cir. 2006); Mays v. Buckeye Rural Elec. Coop.,
Inc., 277 F.3d 873, 876 (6th Cir. 2002).
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II. Issues Related to ECOA, Regulation B and Noncitizen Borrowers
While Regulation B describes certain conditions under which
creditors may consider immigration status, creditors should remain
cognizant that ECOA and Regulation B expressly forbid discrimination on
the basis of certain protected characteristics, including race and
national origin. Immigration status may broadly overlap with or, in
certain circumstances, serve as a proxy for these protected
characteristics. Creditors should therefore be aware that if their
consideration of immigration status is not ``necessary to ascertain the
creditor's rights and remedies regarding repayment'' and it results in
discrimination on a prohibited basis, it violates ECOA and Regulation
B.
Accordingly, creditors must ensure that they do not run afoul of
ECOA's nondiscrimination provisions when considering immigration
status. As a general matter, creditors should evaluate whether their
reliance on immigration status, citizenship status, or ``alienage''
(i.e., an individual's status as a non-citizen) is necessary or
unnecessary to ascertain their rights or remedies regarding repayment.
To the extent that a creditor is relying on immigration status for a
reason other than determining its rights or remedies for repayment, and
the creditor cannot show that such reliance is necessary to meet other
binding legal obligations, such as restrictions on dealings with
citizens of particular countries, 12 CFR part 1002, supp I. ] 2(z)-2,
the creditor may risk engaging in unlawful discrimination, including on
the basis of race or national origin, in violation of ECOA and
Regulation B.
For example, if a creditor has a blanket policy of refusing to
consider applications from certain groups of noncitizens regardless of
the credit qualifications of individual borrowers within that group,
that policy may risk violating ECOA and Regulation B. This risk could
arise because some individuals within those groups may have sufficient
credit scores or other individual circumstances that may resolve
concerns about the creditor's rights and remedies regarding repayment.
In addition, the overbroad consideration of certain criteria--such
as how long a consumer has had a Social Security Number--may implicate
or serve as a proxy for citizenship or immigration status, which in
turn, may implicate a protected characteristic under ECOA like national
origin or race. Such overbroad policies may harm applicants with these
protected characteristics without being necessary to ascertain the
creditor's rights and remedies for repayment or to meet other binding
legal obligations. 12 CFR 1002.6(b)(7); 12 CFR part 1002, supp I. ]
2(z)-2. Any claims that such policies are necessary to preserve the
creditor's rights and remedies regarding repayment or to meet other
binding legal obligations should be supported by evidence and cannot be
a pretext for discrimination.
Similarly, if a creditor requires documentation, identification, or
in-person applications only from certain groups of noncitizens, and
this requirement is not necessary for assessing the creditor's ability
to obtain repayment or fulfilling the creditors' legal obligations,
that policy may violate ECOA and Regulation B by harming applicants on
the basis of national origin or race.
In addition to potential violations of ECOA and Regulation B,
creditors should be mindful of their obligations under 42 U.S.C. 1981
(section 1981).\5\ Section 1981 provides, in relevant part, that
``[a]ll persons within the jurisdiction of the United States shall have
the same right in every State and Territory to make and enforce
contracts . . . as is enjoyed by white citizens[,]'' 42 U.S.C. 1981(a),
and has long been construed to prohibit discrimination based on
alienage.\6\ To the extent that a creditor's consideration of
immigration status would violate Section 1981, courts have made clear
that the limited consideration of immigration status that is
permissible under ECOA and Regulation B does not conflict with Section
1981, creditors must therefore comply with both statutes.\7\ Indeed,
far from conflicting, courts have observed that ECOA's prohibition of
national origin discrimination and Section 1981's prohibitions
complement one another \8\ and that discrimination that arises from
overbroad restrictions on lending to noncitizens may violate either or
both statutes.\9\
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\5\ Neither the CFPB nor the DOJ has enforcement or regulatory
authority with regards to section 1981, and therefore discussion of
this statute is limited to discussing its interaction with ECOA and
relevant court decisions.
\6\ See, e.g., Anderson v. Conboy, 156 F.3d 167, 173 (2d Cir.
1998) (explaining that ``use of `persons' rather than `citizens' was
deliberate'' as Congress changed a previous version of the statute
that mentioned ``all citizens'' to ``all persons'' in order to
``alleviate the plight of Chinese immigrants . . . burdened by state
laws'' in addition to African Americans); Duane v. GEICO, 37 F.3d
1036, 1043 (4th Cir. 1994) (``under the plain language of the
provision, `all persons,' blacks and aliens, receive the same
protection against discrimination''); Sagana v. Tenorio, 384 F.3d
731, 739 (9th Cir. 2004), as amended (Oct. 18, 2004) (``Sec. 1981
prohibits alienage discrimination''); but see Resendiz v. Exxon
Mobil Corp., 72 F.4th 623, 627 (4th Cir. 2023) (explaining that,
although the Supreme Court has not said that Section 1981 protects
against alienage-based discrimination, ``the Fourth Circuit has
squarely done so'' in Duane).
\7\ See, e.g., Perez v. Wells Fargo & Co., No. 17-CV-00454-MMC,
2017 WL 3314797, at *3 (N.D. Cal. Aug. 3, 2017) (denying motion to
dismiss for Section 1981 claim and rejecting contention that ECOA
superseded Section 1981, noting that, although ECOA was a more
specific statute, ECOA did not conflict with the section 1981 claims
because ``[a] creditor can comply with Sec. 1981 and the ECOA by
not discriminating on the basis of any of the categories listed in
the two statutes''); Juarez v. Soc. Fin., Inc., No. 20-CV-03386-HSG,
2021 WL 1375868, at *7 (N.D. Cal. Apr. 12, 2021) (same) (also
explaining that Regulation B ``does not empower a creditor to
decline credit solely on the basis of immigration status''); Garcia
v. Harborstone Credit Union, No. C21-5148 BHS, 2021 WL 3491745, at
*3 (W.D. Wash. Aug. 9, 2021) (ECOA does not preclude Section 1981
claim for alienage discrimination); Maystrenko v. Wells Fargo, N.A.,
No. 21-CV-00133-JD, 2021 WL 5232221, at *4 (N.D. Cal. Nov. 10, 2021)
(same); Camacho v. Alliant Credit Union, No. 22-CV-01690-BLF, 2023
WL 149999, at *3 (N.D. Cal. Jan. 10, 2023) (same).
\8\ See, e.g., Juarez, 2021 WL 1375868, at *7 (ECOA was ``not
intended to limit any of the broad protections afforded by Sec.
1981[,]'' but rather to ``expand protections against credit
discrimination.'') (citing Perez, 2017 WL 3314797, at *2-4);
Maystrenko, at *4 (noting that ECOA prohibits discrimination in
lending on the basis of race, color, religion, national origin, and
other grounds, 15 U.S.C. 1691(a), and section 1981 prohibits
alienage discrimination).
\9\ Supreme Court precedent makes clear that ``when two statutes
are capable of co-existence, it is the duty of the courts, absent a
clearly expressed congressional intention to the contrary, to regard
each as effective.'' Morton v. Mancari, 417 U.S. 535, 551 (1974);
Radzanower v. Touche Ross & Co., 426 U.S. 148, 155 (1976)
(explaining that unless there is an ```irreconcilable conflict' in
the sense that there is a positive repugnancy between [statutes]''
both are regarded as effective).
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Conclusion
ECOA and other laws protect consumers and help ensure fair lending
and credit opportunities for qualified borrowers. Creditors should be
mindful of those obligations as they relate to noncitizen borrowers and
ensure that
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credit decisions are based on non-discriminatory criteria.
Rohit Chopra,
Director, Consumer Financial Protection Bureau.
[FR Doc. 2023-22968 Filed 10-17-23; 8:45 am]
BILLING CODE 4810-AM-P
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This is legal information, not legal advice. Laws vary by jurisdiction and change frequently. Always verify current law with official sources and consult a licensed attorney in your jurisdiction for advice on your specific situation.