[Federal Register Volume 88, Number 200 (Wednesday, October 18, 2023)]
[Notices]
[Pages 71845-71847]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-22968]


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CONSUMER FINANCIAL PROTECTION BUREAU


Joint Statement on Fair Lending and Credit Opportunities for 
Noncitizen Borrowers Under the Equal Credit Opportunity Act

AGENCY: Consumer Financial Protection Bureau.

ACTION: Notice of joint statement.

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SUMMARY: The Consumer Financial Protection Bureau (CFPB) and the 
Department of Justice (DOJ) have released a joint statement to assist 
creditors and borrowers in understanding the potential civil rights 
implications of a creditor's consideration of an individual's 
immigration status under the Equal Credit Opportunity Act (ECOA).

DATES: This information is current as of October 12, 2023.

FOR FURTHER INFORMATION CONTACT: Sonia Lin, Office of Consumer 
Populations, [email protected]. If you require this document in an 
alternative electronic format, please contact 
[email protected].

SUPPLEMENTARY INFORMATION: The Consumer Financial Protection Bureau 
(CFPB) and Department of Justice (DOJ) (collectively, the agencies) 
jointly issue this statement \1\ to assist creditors and borrowers in 
understanding the potential civil rights implications of a creditor's 
consideration of an individual's immigration status under the Equal 
Credit Opportunity Act (ECOA). ECOA does not expressly prohibit 
consideration of immigration status, and, as explained further below, a 
creditor may consider an applicant's immigration status when necessary 
to ascertain the creditor's rights regarding repayment. However, 
creditors should be aware that unnecessary or overbroad reliance on 
immigration status in the credit decisioning process, including when 
that reliance is based on bias, may run afoul of ECOA's 
antidiscrimination provisions, and could also violate other laws.
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    \1\ This document is for informational purposes only. It does 
not impose any legal requirements, nor does it restrict the 
agencies' exercise of their authorities or confer rights of any 
kind, and it is not enforceable.
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I. ECOA and Regulation B

    The agencies are charged with enforcing the antidiscrimination 
provisions of ECOA, requirements that are essential for ensuring fair, 
competitive and nondiscriminatory lending markets.\2\ ECOA prohibits 
discrimination by a creditor in any aspect of a credit transaction, on 
the basis of race, color, religion, national origin, sex (including 
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. 15 
U.S.C. 1691. Discouraging applications for credit on a prohibited basis 
is also prohibited.
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    \2\ The CFPB enforces ECOA with respect to any person subject to 
ECOA's coverage, with limited exclusions under the Consumer 
Financial Protection Act. 15 U.S.C. 1691c(a)(9). The DOJ enforces 
ECOA where there is evidence of a ``pattern or practice'' of 
discrimination. 15 U.S.C. 1691e(h).
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    ECOA is implemented by regulations found at 12 CFR part 1002, 
commonly known as ``Regulation B.'' ECOA and Regulation B apply to all 
types of credit, including both personal credit and business credit. 
Among other things, Regulation B sets forth ``[r]ules concerning 
evaluation of applications'' for credit. 12 CFR 1002.6. Under 
Regulation B, creditors shall not consider race, color, religion, 
national origin, or sex in any aspect of a credit transaction. 12 CFR 
1002.6(b)(9).\3\ Subject to that restriction, ``a creditor may consider 
any information obtained, so long as the information is not used to 
discriminate against an applicant on a prohibited basis.'' 12 CFR 
1002.6(a).
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    \3\ The list of prohibited bases in 12 CFR 1002.6(b)(9) does not 
include all characteristics protected under ECOA. The limited 
circumstances for considering certain other prohibited bases, such 
as age and marital status, are discussed elsewhere in 12 CFR 
1002.6(b).
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    Thus, while ECOA and Regulation B do not expressly prohibit 
consideration of immigration status, they do prohibit creditors from 
using immigration status to discriminate on the basis of national 
origin, race, or any other protected characteristic.\4\ Regulation B 
notably

[[Page 71846]]

provides that a ``creditor may consider [an] applicant's immigration 
status or status as a permanent resident of the United States, and any 
additional information that may be necessary to ascertain the 
creditor's rights and remedies regarding repayment.'' 12 CFR 
1002.6(b)(7). Regulation B does not, however, provide a safe harbor for 
all consideration of immigration status.
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    \4\ See Espinoza v. Farah Mfg. Co., 414 U.S. 86, 92, 94 (1973) 
(noting that title VII, which prohibits employment discrimination, 
``prohibits discrimination on the basis of citizenship whenever it 
has the purpose or effect of discriminating on the basis of national 
origin''). Courts have generally interpreted prohibitions under 
title VII and ECOA consistently. See, e.g., Garcia v. Johanns, 444 
F.3d 625, 632 (D.C. Cir. 2006); Mays v. Buckeye Rural Elec. Coop., 
Inc., 277 F.3d 873, 876 (6th Cir. 2002).
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II. Issues Related to ECOA, Regulation B and Noncitizen Borrowers

    While Regulation B describes certain conditions under which 
creditors may consider immigration status, creditors should remain 
cognizant that ECOA and Regulation B expressly forbid discrimination on 
the basis of certain protected characteristics, including race and 
national origin. Immigration status may broadly overlap with or, in 
certain circumstances, serve as a proxy for these protected 
characteristics. Creditors should therefore be aware 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.
    Accordingly, creditors must ensure that they do not run afoul of 
ECOA's nondiscrimination provisions when considering immigration 
status. As a general matter, creditors should evaluate whether their 
reliance on immigration status, citizenship status, or ``alienage'' 
(i.e., an individual's status as a non-citizen) is necessary or 
unnecessary to ascertain their rights or remedies regarding repayment. 
To the extent that a creditor is relying on immigration status for a 
reason other than determining its rights or remedies for repayment, and 
the creditor cannot show that such reliance is necessary to meet other 
binding legal obligations, such as restrictions on dealings with 
citizens of particular countries, 12 CFR part 1002, supp I. ] 2(z)-2, 
the creditor may risk engaging in unlawful discrimination, including on 
the basis of race or national origin, in violation of ECOA and 
Regulation B.
    For example, if a creditor has a blanket policy of refusing to 
consider applications from certain groups of noncitizens regardless of 
the credit qualifications of individual borrowers within that group, 
that policy may risk violating ECOA and Regulation B. This risk could 
arise because some individuals within those groups may have sufficient 
credit scores or other individual circumstances that may resolve 
concerns about the creditor's rights and remedies regarding repayment.
    In addition, the overbroad consideration of certain criteria--such 
as how long a consumer has had a Social Security Number--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. Such overbroad policies may harm applicants with these 
protected characteristics without being necessary to ascertain the 
creditor's rights and remedies for repayment or to meet other binding 
legal obligations. 12 CFR 1002.6(b)(7); 12 CFR part 1002, supp I. ] 
2(z)-2. Any claims that such policies are necessary to preserve the 
creditor's rights and remedies regarding repayment or to meet other 
binding legal obligations should be supported by evidence and cannot be 
a pretext for discrimination.
    Similarly, if a creditor requires documentation, identification, or 
in-person applications only from certain groups of noncitizens, and 
this requirement is not necessary for assessing the creditor's ability 
to obtain repayment or fulfilling the creditors' legal obligations, 
that policy may violate ECOA and Regulation B by harming applicants on 
the basis of national origin or race.
    In addition to potential violations of ECOA and Regulation B, 
creditors should be mindful of their obligations under 42 U.S.C. 1981 
(section 1981).\5\ Section 1981 provides, in relevant part, that 
``[a]ll persons within the jurisdiction of the United States shall have 
the same right in every State and Territory to make and enforce 
contracts . . . as is enjoyed by white citizens[,]'' 42 U.S.C. 1981(a), 
and has long been construed to prohibit discrimination based on 
alienage.\6\ To the extent that a creditor's consideration of 
immigration status would violate Section 1981, courts have made clear 
that the limited consideration of immigration status that is 
permissible under ECOA and Regulation B does not conflict with Section 
1981, creditors must therefore comply with both statutes.\7\ Indeed, 
far from conflicting, courts have observed that ECOA's prohibition of 
national origin discrimination and Section 1981's prohibitions 
complement one another \8\ and that discrimination that arises from 
overbroad restrictions on lending to noncitizens may violate either or 
both statutes.\9\
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    \5\ Neither the CFPB nor the DOJ has enforcement or regulatory 
authority with regards to section 1981, and therefore discussion of 
this statute is limited to discussing its interaction with ECOA and 
relevant court decisions.
    \6\ See, e.g., Anderson v. Conboy, 156 F.3d 167, 173 (2d Cir. 
1998) (explaining that ``use of `persons' rather than `citizens' was 
deliberate'' as Congress changed a previous version of the statute 
that mentioned ``all citizens'' to ``all persons'' in order to 
``alleviate the plight of Chinese immigrants . . . burdened by state 
laws'' in addition to African Americans); Duane v. GEICO, 37 F.3d 
1036, 1043 (4th Cir. 1994) (``under the plain language of the 
provision, `all persons,' blacks and aliens, receive the same 
protection against discrimination''); Sagana v. Tenorio, 384 F.3d 
731, 739 (9th Cir. 2004), as amended (Oct. 18, 2004) (``Sec.  1981 
prohibits alienage discrimination''); but see Resendiz v. Exxon 
Mobil Corp., 72 F.4th 623, 627 (4th Cir. 2023) (explaining that, 
although the Supreme Court has not said that Section 1981 protects 
against alienage-based discrimination, ``the Fourth Circuit has 
squarely done so'' in Duane).
    \7\ See, e.g., Perez v. Wells Fargo & Co., No. 17-CV-00454-MMC, 
2017 WL 3314797, at *3 (N.D. Cal. Aug. 3, 2017) (denying motion to 
dismiss for Section 1981 claim and rejecting contention that ECOA 
superseded Section 1981, noting that, although ECOA was a more 
specific statute, ECOA did not conflict with the section 1981 claims 
because ``[a] creditor can comply with Sec.  1981 and the ECOA by 
not discriminating on the basis of any of the categories listed in 
the two statutes''); Juarez v. Soc. Fin., Inc., No. 20-CV-03386-HSG, 
2021 WL 1375868, at *7 (N.D. Cal. Apr. 12, 2021) (same) (also 
explaining that Regulation B ``does not empower a creditor to 
decline credit solely on the basis of immigration status''); Garcia 
v. Harborstone Credit Union, No. C21-5148 BHS, 2021 WL 3491745, at 
*3 (W.D. Wash. Aug. 9, 2021) (ECOA does not preclude Section 1981 
claim for alienage discrimination); Maystrenko v. Wells Fargo, N.A., 
No. 21-CV-00133-JD, 2021 WL 5232221, at *4 (N.D. Cal. Nov. 10, 2021) 
(same); Camacho v. Alliant Credit Union, No. 22-CV-01690-BLF, 2023 
WL 149999, at *3 (N.D. Cal. Jan. 10, 2023) (same).
    \8\ See, e.g., Juarez, 2021 WL 1375868, at *7 (ECOA was ``not 
intended to limit any of the broad protections afforded by Sec.  
1981[,]'' but rather to ``expand protections against credit 
discrimination.'') (citing Perez, 2017 WL 3314797, at *2-4); 
Maystrenko, at *4 (noting that ECOA prohibits discrimination in 
lending on the basis of race, color, religion, national origin, and 
other grounds, 15 U.S.C. 1691(a), and section 1981 prohibits 
alienage discrimination).
    \9\ Supreme Court precedent makes clear that ``when two statutes 
are capable of co-existence, it is the duty of the courts, absent a 
clearly expressed congressional intention to the contrary, to regard 
each as effective.'' Morton v. Mancari, 417 U.S. 535, 551 (1974); 
Radzanower v. Touche Ross & Co., 426 U.S. 148, 155 (1976) 
(explaining that unless there is an ```irreconcilable conflict' in 
the sense that there is a positive repugnancy between [statutes]'' 
both are regarded as effective).
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Conclusion

    ECOA and other laws protect consumers and help ensure fair lending 
and credit opportunities for qualified borrowers. Creditors should be 
mindful of those obligations as they relate to noncitizen borrowers and 
ensure that

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credit decisions are based on non-discriminatory criteria.

Rohit Chopra,
Director, Consumer Financial Protection Bureau.
[FR Doc. 2023-22968 Filed 10-17-23; 8:45 am]
BILLING CODE 4810-AM-P