Financial Institutions Cannot Solely Consider Immigration Status in Processing Borrowers’ Applications

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Creditors who use an applicant’s immigration status for any reason other than determining the person’s ability to repay a loan have been put on notice by the Consumer Financial Protection Bureau (CFPB) and the Department of Justice (DOJ).

These agencies have issued a joint statement informing creditors of “the potential civil rights implications of a creditor’s consideration of an individual’s immigration status under the Equal Credit Opportunity Act (ECOA)” and instructing them that while they can consider a person’s immigration status in evaluating their ability to repay loans, they risk violating the ECOA if their consideration of it is “unnecessary or overbroad.”

The ECOA prohibits discrimination by a creditor based on race, color, religion, national origin, sex, 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.

While the joint statement confirms the ECOA and its Regulation B (12 C.F.R. 1002) do not specifically ban consideration of immigration status, it does confirm they prohibit creditors from using immigration status to discriminate on the basis of national origin, race, or any other protected area.

In light of this joint statement, creditors should be mindful 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.

The announcement listed three particular areas of concern:

  1. Blanket policies prohibiting consideration of applications by specific groups of noncitizens regardless of the credit scores of individuals in the group;
  2. Requiring specific documentation and/or identification from noncitizens; and
  3. Requiring specific application methods or in-person applications from noncitizens.

The joint statement also listed other areas for lenders to be aware of, including consideration of the length of time an applicant has had a Social Security Number. In their view, this “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.”

Lenders may want to consult with their legal counsel to evaluate their internal policies and procedures to ensure their policies comply with this announcement.

For more information about this and other immigration issues, please contact the author of this alert, James G. Aldrich, Jr., at or 248-203-0583, or your Dykema relationship attorney.

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