The statement points out that under the Equal Credit Opportunity Act (ECOA) and its implementing regulations, it is unlawful for lenders to discriminate against credit applicants based on their national origin or race, regardless of their immigration status.
DOJ explained that the statement was prompted by reports of consumers being rejected for credit cards as well as auto, student, and personal loans because of their immigration status, even when they were otherwise qualified to receive the loans.
The joint statement explained that, although a creditor may consider an applicant’s immigration status when necessary to ascertain the creditor’s rights regarding repayment, “unnecessary or overbroad reliance on immigration status in the credit decision process, including when that reliance is based on bias, may run afoul of ECOA’s anti-discrimination provisions and could also violate other laws.”
According to Weiner Brodsky Kider PC, a law firm, the statement says that ECOA does allow immigration status to be considered in credit decisions “when necessary to ascertain the creditor’s rights regarding repayment.” But, if a creditor is considering immigration status beyond this, the credit decision may result in discrimination on a prohibited basis under ECOA and Regulation B.
Some examples of violation include: Never considering applications from individuals who are within certain groups of noncitizens regardless of any individual’s credit qualifications; Overbroad consideration of criteria that implicates immigration status (e.g. number of years the applicant has held a Social Security Number); and Application requirements that only apply to certain groups of noncitizens, if not necessary to determine ability to repay.
Orrick, Herrington & Sutcliffe LLP, a global law firm states, “Among other things, the agencies cautioned against the overbroad consideration of criteria that may serve as a proxy for citizenship of immigration status, such as how long a consumer has had a social security number. Likewise, requiring only certain groups of noncitizens to provide documentation, identification, or in-person applications may also violate ECOA by harming applicants on the basis of national origin or race.”