CFPB to Lenders: Assess Immigration Status in "Ability-to-Repay" Reviews

In a statement published in the Federal Register, the CFPB reminded lenders that a borrower's immigration status can bear on "ability-to-repay" determinations for mortgages and credit cards.

The CFPB said the Truth in Lending Act ("Regulation Z") requires a reasonable, good-faith assessment of a consumer's ability to repay, based on current or reasonably expected income and employment. The agency said that creditors generally consider only what is known when credit is extended and need not weigh changes that cannot be reasonably anticipated. But if a borrower's application or records indicate that immigration status could change their repayment ability - for example, because a borrower who is not lawfully present or authorized to work may be subject to removal - the creditor must consider that information. The CFPB reminded lenders that the guidance also aligns with President Trump's Executive Order: "Restoring Integrity to America's Financial System".   

The agency noted that Equal Credit Opportunity Act ("Regulation B") already permits creditors to consider immigration status. Signs that a borrower may not be lawfully present, the CFPB said, could include direct inquiry or reliance on an Individual Taxpayer Identification Number.

The Bureau cautioned that the published statement is guidance without the force of law, that many lawful immigration statuses exist, and that it could not assume borrowers with different statuses have identical abilities to repay.