Consumer Financial Protection Bureau and the Department of Justice Withdraw Joint Statement on Fair Lending and Credit Opportunities for Noncitizen Borrowers

The CFPB and Department of Justice have officially withdrawn their previous joint guidance regarding how lenders handle credit applications from non-U.S. citizens. This move creates a shift in how financial institutions and merchants should evaluate risk for borrowers based on immigration status. For business owners, this means your financing partners may soon update their underwriting criteria or application requirements for noncitizen customers. Previously, the agencies warned that rejecting applicants solely based on immigration status could be seen as discrimination under the Equal Credit Opportunity Act (ECOA). While the withdrawal of the statement gives lenders more flexibility to consider a borrower's legal status—specifically regarding how long they are likely to remain in the country to repay a loan—it does not give a green light for blanket discrimination. Retailers should expect some volatility in approval rates for this specific demographic as lenders recalibrate their compliance and risk models. It is crucial to check in with your primary and secondary lenders to see if they are making changes to their 'Stipulations' (Stips) or document requirements for non-permanent residents. Navigating these changes carefully will help you maintain sales volume without falling out of compliance with broader fair lending laws.

Source: CFPB Newsroom

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