CFPB, DOJ Warn Against Immigration Status-Based Credit Discrimination
The Consumer Financial Protection Bureau (CFPB) and the Department of Justice (DOJ) issued a joint statement last week cautioning financial institutions against using a consumer's immigration status as the sole basis for determining creditworthiness. They noted some consumers have reported being denied credit cards and loan solely due to their immigration status, even when they have strong credit histories. While the Equal Credit Opportunity Act (ECOA) permits creditors to consider immigration status, excessive reliance on this factor could be viewed as discrimination based on national origin, race or other protected statuses. The agencies stressed that such policies must be supported by evidence of necessity and cannot be a pretext for discrimination. They also emphasized that the ECOA's allowance for considering immigration status doesn't provide a safe harbor from other laws explicitly banning discrimination based on that status.
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Regulators to Finalize CRA Changes
The Federal Reserve Board of Governors will vote next Tuesday to finalize proposed changes to the Community Reinvestment Act. In 2022, the Federal Reserve, the Office of the Comptroller of the Currency (OCC) and the Federal Deposit Insurance Corporation (FDIC) proposed major revisions to the 46-year-old law. The NBA previously submitted comments in response to the proposed changes.
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FHFA to Allow COVID Forbearance for 'Rep and Warrant' Relief
Fannie Mae and Freddie Mac will extend their representation and warrant policies to include mortgages that have successfully exited a COVID-19 forbearance plan. Previously, these policies only covered loans affected by natural disasters. This change means that the time a borrower spent in COVID-19 forbearance will also be considered when evaluating their payment history for the first 36 months after the loan's origination. These new policies will take effect on October 31.
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