Federal Agencies Issue 'Reminder' Statement Regarding Lending to Immigrants
The CFPB and DOJ say consumers are allegedly being turned down for loans because they are immigrants, which may violate federal laws.
The Consumer Financial Protection Bureau (CFPB) and the Department of Justice (DOJ) on Thursday issued a joint statement to remind financial institutions that all credit applicants, regardless of their immigration status, are protected from discrimination on the basis of their national origin, race and other characteristics covered by the Equal Credit Opportunity Act.
The federal agencies said they issued this statement because consumers have reported being allegedly rejected for credit cards as well as for auto, student, personal and equipment loans because of their immigration status, even when they have strong credit histories and ties to the United States and are otherwise qualified to receive the loans.
The CFPB and DOJ, however, did not say how many consumers have been rejected for credit based on their immigration status this year or in previous years. CFPB did not respond to CU Times‘ request for additional information in time for today’s deadline.
While the Equal Credit Opportunity Act allows lenders to consider an applicant’s immigration status when necessary to ascertain the creditor’s rights regarding repayment, financial institutions should be aware that “unnecessary or overbroad reliance on immigration status, including when that reliance is based on bias, may run afoul of the law”, according to the CFPB and DOJ.
“This guidance reminds lenders that denying someone access to credit based solely on their actual or perceived immigrant status may violate federal law,” U.S. Assistant Attorney General Kristen Clarke of the DOJ’s Civil Rights Division said in a prepared statement.
The CFPB said it has heard feedback from advocates and consumers – including those protected under the Deferred Action for Childhood Arrivals (DACA) program – have allegedly been denied credit cards, auto loans, student loans and other loans or credit based on their immigration status.
However, the federal agencies provided no data quantifying the amount of feedback received from advocates and consumers.
The CFPB did release one example of a complaint filed by a Texas consumer.
“On the phone, [the loan agent] mentioned how our [the consumer and their girlfriend’s] credit scores and income were very good, and we should not have any issues getting a final approval [for an auto loan].” Upon learning that the consumer’s girlfriend was an immigrant with protection under DACA, however, the loan agent “immediately said we did not qualify,” according to the consumer complaint.
READ MORE: CFPB-DOJ’s Joint Statement.