Author: David Hood-Nunho
WASHINGTON, Jan 12 (Reuters) – The U.S. Consumer Financial Protection Bureau and the Justice Department on Monday withdrew guidance that explicitly prohibited lenders from discriminating against immigrants and noncitizens, potentially undermining immigrants’ legal ability to get loans.
The guidance, issued by Democratic former President Joe Biden in 2023, clarifies that lenders can consider immigration or citizenship status when deciding on a loan application as long as it is not the only factor and does not result in bias or discrimination.
While underlying law already prohibits discriminatory practices by lenders, the guidance seeks to clearly clarify and enforce enforcement to avoid discrimination.
Lori Sommerfield, a partner in the consumer financial services practice at law firm Troutman Pepper Locke, said rescinding the guidance would further eliminate the remnants of all Biden-era regulations and fulfill President Donald Trump’s immigration policies, two key priorities for the administration.
“Withdrawing this joint guidance does underscore two key priorities of the Trump administration: taking a tougher stance on immigration and continuing efforts to reduce enforcement of federal fair lending laws,” Sommerfield said.
Assistant Attorney General Harmeet Dhillon, who heads the Justice Department’s civil rights division, said in a joint statement with the CFPB announcing the policy that the Biden-era guidance was “ideologically driven,” adding that the withdrawn guidance restored consistency with established federal civil rights laws.
anti-immigration sentiment
Consumer finance lawyers such as former CFPB official and Mayer Brown partner Kris Kully said the withdrawal has an anti-immigration subtext and is consistent with the Trump administration’s broader goal of cracking down on immigration in the new year.
That could be interpreted as a wink and a nod to lenders, Cooley said.
Last April, the government began a strategy to encourage immigrants without legal status to deport themselves. One such strategy invalidates Social Security numbers issued under temporary protection status.
Lenders may simply implement a blanket policy requiring a valid Social Security number to apply for credit that complies with Trump administration policy, but may be violating the law by using this as an excuse to deny immigrants.
“It’s probably all part of the same purpose, which is just to make it unpalatable and unaffordable and otherwise difficult to stay in,” Cooley said.
(Reporting by David Hood-Nuño; Editing by Kat Stafford and Rosalba O’Brien)
