The final rule eliminating disparate impact from enforcement of the Equal Credit Opportunity Act was issued as it was proposed in November, despite more than 64,000 comments on the proposal.
The Federal Housing Finance Agency said other agencies are already responsible for enforcing fair lending and fair housing laws. However, critics argued that the administration has been steadily eviscerating the enforcement arms of those agencies as well.
America First Legal argued that Reg. C isn’t required under the Home Mortgage Disclosure Act and that it pressures mortgage lenders into making decisions based on borrowers’ demographic information.
The move clarifies that the Equal Credit Opportunity Act doesn’t prohibit lenders’ consideration of immigration status when evaluating credit applications.
Consumer advocates said the proposed changes will make it even more difficult for underserved markets to access credit, particularly people of color that continue to experience redlining and lending discrimination.
Several mortgage trade groups expressed support for a proposal from the CFPB to remove the use of disparate-impact liability under the Equal Credit Opportunity Act. Consumer advocates oppose the effort.
Sen. Elizabeth Warren, D-MA, though raised concerns about efforts by CFPB Acting Director Russell Vought and the Trump administration to “sideline” the CFPB.
FHFA Director Bill Pulte’s decision to rescind or amend existing agency guidance on fair lending and fair housing requirements has muddled the compliance requirements for Fannie and Freddie.
The proposed changes would eliminate the use of disparate impact under the Equal Credit Opportunity Act and restrict conditions for creditors to offer special purpose credit programs.