In response to the Consumer Financial Protection Bureau’s (CFPB) final rule that amends Equal Credit Opportunity Act (ECOA) provisions around disparate impact, discouragement of applicants and special purpose credit programs (SPCPs), National Community Reinvestment Coalition (NCRC) President and CEO Jesse Van Tol issued the following statement:
“The CFPB’s decision to eliminate disparate impact protections under ECOA is a real setback for fair lending. Disparate impact is one of the key ways we know policies that look neutral may still shut qualified borrowers out of credit and reinforce long-standing inequities. For example, a lender may impose minimum loan amounts that effectively exclude applicants applying for smaller-dollar mortgages, which in turn disproportionately impacts borrowers of color and lower-income communities even when they are creditworthy.
Weakening that standard and limiting special purpose credit programs will further reduce access to credit. SPCPs are practical, lawful tools used to reach underserved communities when standard underwriting practices do not work well.
This rule is a green light for discrimination in lending. By stripping out disparate impact and undermining special purpose credit programs, the CFPB is making it harder to challenge exclusion and easier to deny underserved communities a fair shot at credit.”
