The Consumer Financial Protection Bureau (CFPB) is proposing changes to rules under the Equal Credit Opportunity Act (ECOA) to clarify lenders’ responsibilities on issues including disparate impact, discouragement of applicants and special purpose credit programs (SPCPs) that industry leaders say could hurt women’s ability to get a mortgage loan in their own name. The comment period for the proposal ends on Dec. 15.
The proposal, published on Nov. 13 in the Federal Register, would remove the agency’s recognition of “disparate impact” claims, which allow borrowers to challenge policies that disproportionately harm certain groups, even without evidence of intentional discrimination.
After the proposal was published, Nikitra Bailey, executive vice president at the National Fair Housing Alliance (NFHA) testified before Congress about her reasons for opposing the change and has now released a video on YouTube that outlines her concerns.
“ECOA became the law in 1974 and it stops banks from denying you a loan or a credit card because of who you are and things that you cannot control, like your race, your gender, your skin color, your religion, your age and whether or not you’re married,” Bailey says in the video. “This is a law that gave us women the ability to go into a bank and get a fair loan for a home without having a male co-signer sign on our behalf.”
Mortgage industry veteran Faith Schwartz, founder and CEO of Housing Finance Strategies, shared Bailey’s video on LinkedIn and urged mortgage leaders to provide feedback to the CFPB before the comment period ends on Dec. 15. It has now been reshared by others and the comments suggest the issue had flown under the wire for many in the industry, who expressed shock at the proposal.
What’s in the proposal?
In addition to removing the CFPB’s recognition of disparate impact claims, the proposal would also tighten the definition of what counts as discouraging applica