CFPB Plans To Scrap Biden-Era Policy On Noncitizen Fair Lending

The headline refers to a move by the Consumer Financial Protection Bureau (CFPB), under President Trump, to withdraw a 2023 Biden‑era fair‑lending policy that limited how lenders could use immigration status when making credit decisions for noncitizens.​

What policy is being scrapped?

• In October 2023, the CFPB and the Department of Justice issued a joint statement on “fair lending and credit opportunities for noncitizen borrowers” under the Equal Credit Opportunity Act (ECOA).​

• That statement warned that “unnecessary or overbroad” reliance on immigration status in credit decisioning (for mortgages, auto loans, credit cards, small‑business credit, etc.) could violate ECOA’s ban on discrimination based on race, national origin, and other protected traits.​

What did the Biden‑era guidance say?

• The guidance acknowledged that lenders may consider immigration status where necessary to assess repayment or comply with other laws, as Regulation B allows, but stressed there is no blanket safe harbor for all uses of immigration status.​

• It gave examples: blanket policies rejecting certain groups of noncitizens regardless of their individual credit qualifications, or using factors like how long a person has had a Social Security number as a proxy for immigration status, were flagged as potential fair‑lending violations.​

What is the CFPB planning to do now?

• According to Bloomberg Law, the CFPB has submitted a notice to the White House Office of Information and Regulatory Affairs (OIRA) to withdraw that 2023 joint statement, effectively scrapping the Biden‑era noncitizen fair‑lending policy.​

• This move aligns with broader Trump‑era priorities of tightening immigration rules and rolling back fair‑lending and anti‑bias frameworks, including efforts to weaken disparate‑impact analysis in fair‑lending enforcement.​

What does this mean for noncitizen borrowers?

• Scrapping the guidance would likely give lenders more leeway to rely on immigration and citizenship status in credit decisions, as long as they stay within the baseline requirements of ECOA and Regulation B.​

• Civil‑rights and consumer advocates warn this could make it easier for lenders to adopt broad exclusions or stricter requirements for noncitizens that may disproportionately affect immigrants of certain races or national origins, even if formal ECOA rules remain unchanged.​

Legal backdrop: ECOA and immigration status

• ECOA and its Regulation B do not list immigration or citizenship status as a prohibited basis, and they explicitly permit creditors to consider immigration status to determine their rights and remedies regarding repayment.​

• However, the law still bars discrimination based on protected traits such as national origin or race, and regulators have long cautioned that using immigration status as a proxy for those traits can lead to illegal discrimination.​

Withdrawing the Biden‑era guidance will likely make it easier for lenders to say no to noncitizen borrowers, especially those with temporary status, and could reduce access to affordable credit for many immigrants.​

Likely effects on access

• Lenders will have more room to use immigration and citizenship status as a factor (or proxy) in decisions, such as denying applications from whole groups of noncitizens or imposing stricter terms, as long as they avoid obvious national‑origin discrimination on paper.​

• Advocacy groups warn this will discourage applications and make denials more common for immigrants, particularly Latinos and mixed‑status families, who already face higher barriers to credit.​

Types of borrowers most affected

• Noncitizens with temporary visas or no permanent status (students, seasonal workers, DACA recipients, asylum seekers) are most exposed because Regulation B more clearly allows lenders to favor citizens and permanent residents over these groups.​

• Even long‑term residents with stable income may see tighter standards, such as higher documentation demands, shorter loan terms, or higher rates justified by perceived “repayment risk” tied to immigration status.​

Interaction with broader CFPB rollback

• At the same time, the CFPB is proposing to sharply limit “disparate impact” and other tools used to challenge policies that disproportionately harm protected groups under ECOA.​

• Taken together, weaker enforcement tools and the removal of the noncitizen‑fair‑lending guidance mean it will be harder to challenge lending models or policies that systematically disadvantage immigrant communities, even when the effect is large.​

What protections remain

• ECOA and Regulation B still prohibit discrimination based on race, color, national origin, sex, religion, age, marital status, or receipt of public assistance, and agencies have long said overbroad immigration‑based policies can still violate those rules.​

• State fair‑lending and civil‑rights laws (including some that treat “alienage” or citizenship status itself as a protected class) may continue to limit how lenders can use immigration status, so the impact will vary by state and product.​