United States
The CFPB is reminding lenders that a borrower's immigration status may be relevant when evaluating their ability to repay certain loans, particularly mortgages and credit card accounts.
In a statement published in the Federal Register, the CFPB said the Truth in Lending Act and Regulation Z require creditors to make a reasonable, good-faith determination that consumers can repay their debts. The Bureau noted that when a lender relies on income from U.S.-based employment, it may need to consider whether a borrower's immigration status could affect continued access to that income.
The guidance states that if information in a loan application suggests a consumer's ability to remain employed in the United States may change, creditors may be obligated to factor that information into ability-to-repay determinations. The CFPB pointed to situations where an individual could be subject to removal from the country, potentially disrupting employment and income streams.
The Bureau emphasized that Regulation B under the Equal Credit Opportunity Act already permits lenders to consider immigration status and residency status when evaluating repayment risk and their ability to collect on a loan. However, the CFPB said the statement does not create new legal requirements and does not carry the force of law.
For credit unions and other lenders, the guidance could prompt reviews of underwriting policies and documentation procedures, particularly for institutions serving immigrant communities, as they balance ability-to-repay obligations with fair lending requirements.
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