WASHINGTON — The National Community Reinvestment Coalition is criticizing new guidance from the Consumer Financial Protection Bureau that would allow lenders to consider a borrower’s immigration status when evaluating credit applications, arguing the policy could limit access to credit for otherwise qualified consumers.
In a statement responding to the CFPB’s newly published guidance, NCRC President and CEO Jesse Van Tol said lending decisions should focus on a borrower’s ability to repay rather than immigration status.
“Credit decisions should be based on a borrower’s actual ability to repay, not hypotheticals based on the borrower’s immigration status,” Van Tol said. “Access to credit expands opportunity for families, entrepreneurs and communities. Policies that encourage lenders to consider immigration status risk excluding qualified borrowers from the financial mainstream.”
Prior Guidance Rescinded
The CFPB recently announced that it intends to rescind previous guidance that discouraged lenders from considering immigration status in mortgage and other credit decisions. As previously reported by The CU Daily, the Bureau said lenders may consider immigration status when determining a consumer’s creditworthiness, provided the practice complies with applicable federal laws.
The CFPB has argued that immigration status may be relevant to a lender’s assessment of a borrower’s ability to repay a loan and that prior guidance may have discouraged lenders from evaluating factors they consider material to credit risk.
A Double-Standard
Van Tol said the Bureau’s position creates a double standard when compared with criticism from some policymakers regarding financial institutions that have restricted services to customers involved in cryptocurrency-related activities.
“The hypocrisy of discouraging lending to hard-working immigrants who pay taxes, while claiming that banks improperly ‘debanked’ some wealthy people based on their highly risky, often international, crypto transactions should be lost on no one,” Van Tol said in the statement. “Favoring one while denigrating the other makes clear that this policy is not about risk: it’s about picking winners and losers.”
Reduced Access
The NCRC, a nonprofit organization that advocates for fair lending and community investment policies, said the CFPB’s new approach could reduce access to mainstream financial services for immigrant borrowers who otherwise meet traditional underwriting standards.
The CFPB’s guidance is part of a broader reassessment of regulatory policies under the Trump administration, which has emphasized reducing restrictions on lenders and revisiting interpretations of consumer protection laws issued during previous administrations.
The Bureau has not indicated whether additional rulemaking or guidance related to immigration status and credit underwriting will follow.
