WASHINGTON, February 22The US Treasury Department Office of the Comptroller of the Currency issued the following bulletin (No. 2022-3):

The Office of the Comptroller of the Currency (OCC), the Board of Governors from Federal Reserve Systemthe Federal Deposit Insurance Corporationthe National Administration of Credit Unionsthe Consumer Financial Protection Board (CFPB), the US Department of Housing and Urban Development (HUD), the US Department of Justiceand the Federal Housing Finance Agency (collectively, the Agencies) today issued an interagency statement regarding Special Purpose Credit Programs (SPCP) under the Equal Credit Opportunity Act (ECOA) and its regulations. application, Regulation B.

Note for Community banks

This bulletin applies to all community banks./1

Strong points

Advertising

This newsletter

* transmits the inter-agency statement, which

* reminds creditors, including those who are banks, of the possibility under the ECOA and Regulation B to establish SPCPs to meet the credit needs of specified categories of persons.

* draws attention to recent HUD guidance concluding that CPCPs instituted pursuant to the ECOA and Regulation B generally do not violate the Fair Housing Act./2

*provides additional information on SPCPs under ECOA and Regulation B.

* deals with the role of the agency in terms of SPCP.

Additional Information on Special Purpose Credit Programs under ECOA and Regulation B, and recent guidance from HUD

ECOA and Regulation B

The ECOA provides that “[i]It is unlawful for any creditor to discriminate against any applicant, with respect to any aspect of a credit transaction” on a prohibited basis./3

The bases prohibited by the ECOA are race, color, religion, national origin, sex, marital status, age (provided the applicant has the capacity to contract), because any or part of the Applicant’s income is from any government assistance program and because the Applicant has exercised in good faith any right under the Consumer Credit Protection Act.

The ECOA provides, however, that the prohibitions of discrimination are not violated where a for-profit creditor refuses to extend credit offered under an SPCP that meets the standards of Regulation B./4

For example, these programs may include initiatives for low-income minority borrowers or small business loan programs that provide credit to minority-owned or disabled-owned businesses./5

At December 21, 2020the CFPB issued a CPPS Advisory to clarify the content a for-profit organization must include in a written plan that establishes and administers a CPPS under Regulation B./6

In addition, the advisory clarifies the type of research and data that may be appropriate to inform a for-profit organization’s decision to establish a SPCP for the benefit of a specific category of people and provides examples./ 7

Recent HUD Orientation

At December 6, 2021, HUD General Counsel’s Office issued a legal opinion on the Fair Housing Act processing of certain SPCPs designed and implemented in accordance with ECOA and Regulation B./8

The legal opinion concludes that a for-profit institution’s SPCP designed and implemented in accordance with the ECOA and Regulation B generally does not violate fair housing law.

At December 7, 2021the HUD Office for Fair Housing and Equal Opportunity (FHEO) issued a statement urging lenders to use SPCPs to address disparities in homeownership./9

Quoting the HUDs December 6, 2021legal opinion, the FHEO statement encourages lenders to seriously consider establishing SPCPs that comply with the anti-discriminatory and affirmative provisions of the ECOA, Regulation B and the Fair Housing Act./10

The FHEO press release provides that “[s]such programs, if constructed in a thoughtful manner and in accordance with CFPB regulations and guidelines, can be an important step towards closing the racial and ethnic gaps in home ownership and wealth that exist across the country. United States.”/11

the December 6, 2021the opinion of the General Counsel of HUD and the December 7, 2021the FHEO statement provides useful clarification regarding the application of the Fair Housing Act non-discrimination provisions to SPCPs.

The oversight role of the OCC regarding SPCPs

The OCC and other agencies that oversee and enforce the ECOA and Regulation B do not determine whether a program qualifies for SPCP status or whether a particular program benefits an “economically disadvantaged class of persons.” The long-standing official staff commentary on Rule B provides that such determinations must be made by a creditor./12

The OCC has a long-standing practice of consulting with its regulated institutions that are considering introducing CPPS. Although not mandatory, these consultations can allow banks to benefit from the point of view of OCC experts familiar with other SPCPs. In addition, these consultations benefit the OCC by giving it a broader perspective on the populations and the credit products or services that are the subject of the proposed SPCP./13

Further information

please contact Vonda EanesDirector of the Community Reinvestment Act and Fair Lending Policyat (202) 649-5470.

Grovetta N. Gardineer

Principal Assistant Controller for Banking Supervision Policy

Related link

* “Interagency Statement on Special Purpose Credit Programs under the Equal Credit Opportunity Act and Regulation B” (PDF) (https://www.occ.gov/news-issuances /bulletins/2022/bulletin-2022-3a.pdf)

* * *

Footnotes :

1/ “Banks” means collectively National Banks, Federal Savings Associations, Covered Savings Associations and Federal Branches and Agencies of Foreign Banking Organizations.

2/ Refer to the HUD “General Counsel Referral Office on the Fair Housing Act Treatment of certain special purpose credit programs that are designed and operated in accordance with the Equal Credit Opportunity Act and Regulation B.”

3/ See 15 USC 1691(a).

4/ See 15 USC 1691(c)(3).

5/ See 12 CFR 1002.8, Supplement I, Commentary 8(a)-5; Equal Credit Opportunity (Regulation B); Special Purpose Credit Programs, 86 Fed. Reg. 3762, 3765 (January 152021).

6/ See 86 Fed. Reg. at 3762, 3764-65 (January 15, 2021); also refer to the CFPB “Extend access to credit to Underserved Communities” (July 31, 2020), which draws attention to the possibilities of developing SPCPs and the use of positive publicity in accordance with the requirements of ECOA and Regulation B.

7/ See 86 Fed. Reg. at 3765-66.

8/ Refer to the HUD “General Counsel Referral Office on the Fair Housing Act Treatment of certain special purpose credit programs that are designed and operated in accordance with the Equal Credit Opportunity Act and Regulation B.”

9/ Refer to “FHEO’s Statement by HUD Fair Housing and Equal Opportunity Office on special purpose credit programs as a remedy to disparities in home ownership.

10/ Same.

11/ Same.

12/ Refer to CFPB“Commentary for 1002.8 – Special Purpose Credit Programs.”

13/ For example, OCC Newsletter 2003-8, “Financing Minority Businesses”, provides information on ways in which banks can meet the financing needs of minority-owned entrepreneurs in accordance with safe and sound banking practices, describes appropriate lending risk mitigation practices, makes reference to the availability of SPCPs, and states that the OCC encourages banks considering SPCPs to discuss their plans with their examiners.