2023-2024 Tax Planning Guide
Winning Back-Office Strategies to Boost Your Business Agility
VIEWpoint Issue 1 | 2023
A Refresher on the Trust Fund Recovery Penalty for Business Owner...
Valuations Can Help Business Owners Plan for the Future
SBA Lenders: Beware of BSA
On Oct. 12, 2023, the Department of Justice (DOJ) and the Consumer Financial Protection Bureau (CFPB) issued a joint statement reminding financial institutions that reliance on immigration status to deny credit to immigrant consumers and owners of small businesses may constitute a fair lending violation, depending on the facts and circumstances of a case. The Equal Credit Opportunity Act (ECOA) and Regulation B do not prohibit lenders from considering a borrower’s immigration status when evaluating a credit application, and whether they can repay the loan. However, it does prohibit lenders from using immigration status to discriminate against an immigrant consumer or small-business owner based on national origin, race or other protected characteristics.
If a financial institution has a blanket policy of refusing to consider applications from certain groups of non-citizens regardless of the credit qualifications of individual borrowers within that group, the policy may risk violating ECOA and Regulation B. According to the CFPB, 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. In turn, it may implicate a protected characteristic under ECOA like national origin or race. Similarly, if a financial institution requires documentation, identification or in-person applications only from certain groups of non-citizens, and this requirement is not necessary for assessing the institution’s ability to obtain repayment or fulfilling their legal obligations, the policy may violate ECOA and Regulation B by harming applicants based on national origin or race.
The CFPB has received complaints about loan denials due to immigration status, such as the below:
“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 have not 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.”
This publication is distributed for informational purposes only, with the understanding that Doeren Mayhew is not rendering legal, accounting, or other professional opinions on specific facts for matters, and, accordingly, assumes no liability whatsoever in connection with its use. Should the reader have any questions regarding any of the news articles, it is recommended that a Doeren Mayhew representative be contacted.
A quick registration is required to view our resources.
You will only be asked to do this one time (unless you don't save your browser cookies).