Key facts
- Federal agencies have rescinded a Biden-era interagency statement that encouraged lenders to develop Special Purpose Credit Programs (SPCPs).
- The rescission aims to ensure creditors do not discriminate based on prohibited characteristics and comply with ECOA and the Fair Housing Act.
- The action was taken jointly by HUD, CFPB, DOJ, FDIC, NCUA, OCC, and FHFA.
- The agencies cited Supreme Court precedent on heightened scrutiny for race-based policies.
- HUD stated the rollback moves away from policies that favored one class of Americans over another.
Federal housing and financial regulators have formally rescinded a Biden-era interagency statement that had encouraged lenders to develop Special Purpose Credit Programs (SPCPs) aimed at expanding access to credit for historically disadvantaged groups. The agencies stated the move is intended to make clear that creditors may not discriminate against borrowers based on prohibited characteristics and should not rely on the interagency statement going forward.
The rescission aims to ensure that creditors do not use the statement to engage in discriminatory activities inconsistent with the Equal Credit Opportunity Act (ECOA), Regulation B, and the Fair Housing Act. The action, effective Tuesday, was a joint effort by the U.S. Department of Housing and Urban Development (HUD), the Consumer Financial Protection Bureau (CFPB), the Department of Justice (DOJ), the Federal Deposit Insurance Corp. (FDIC), the National Credit Union Administration (NCUA), the Office of the Comptroller of the Currency (OCC), and the Federal Housing Finance Agency (FHFA).
According to the notice, prior interpretations of Regulation B and HUD guidance that allowed for lending programs based on certain applicant characteristics were found to be irreconcilable with the statutory text of ECOA and the FHA, which prohibit discrimination. The agencies also referenced Supreme Court precedent requiring heightened scrutiny for race-based policies. HUD framed the rollback as a shift away from policies that favored one class of Americans over another, while emphasizing that discrimination based on protected characteristics has always been prohibited.
The action aligns with President Donald Trump's executive orders directing agencies to unwind diversity, equity, and inclusion initiatives. Craig Trainor, HUD’s assistant secretary for fair housing and equal opportunity, stated that no regulation can override the Fair Housing Act's prohibition against discrimination. Harmeet Dhillon, the DOJ’s assistant attorney general for civil rights, affirmed that favoring individuals for credit programs based on protected characteristics is illegal and that the department will enforce the law against such 'equity' efforts.