Federal Agencies Release Interagency Statement on Special Purpose Credit Programs Under ECOA Regulation B – Finance and Banking


United States: Federal Agencies Release Interagency Statement on Special Purpose Credit Programs Under ECOA Regulation B

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On February 23, eight federal agencies, including the CFPB, FDIC, OCC, Federal Reserve Board, NCUA, HUD, DOJ, and FHFA, issued an interagency statement reminding creditors of the possibility, under the ECOA and Regulation B, to establish Special Purpose Credit Programs (SPCP) to meet the credit needs of certain classes of persons. According to an accompanying blog, the CFPB said that “lenders are permitted to design and implement SPCPs to extend credit to a class of persons who would otherwise be denied credit or receive it on less favorable terms. , under certain conditions”.

ECOA and Regulation B prohibit any creditor from discriminating against any applicant, with respect to any aspect of a credit transaction on the basis of race, color, religion, national origin or sex. Lenders may, however, favorably consider prohibited factors such as race or ethnicity under CPPS. While encouraging lenders to explore opportunities to develop ECOA and Regulation B compliant SPCPs, the interagency statement outlined previous CFPB guidance issued to help explain how lenders can offer or participate in a SPCP. In addition, the agencies described recent HUD guidance confirming that SPCPs for home loans or credit assistance, which are ECOA and Regulation B compliant, generally would not violate the Fair Housing Act.

Put into practice : Lenders considering SPCPs are encouraged to develop such programs consistent with ECOA and Regulation B requirements and applicable safe and sound lending principles.

The content of this article is intended to provide a general guide on the subject. Specialist advice should be sought regarding your particular situation.

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