The CFPB recently issued a statement reminding creditors that applicants' immigration status may be relevant to the ability-to-pay analyses required under Regulation Z. Notably, the statement differs from past CFPB guidance on the consideration of immigration status in underwriting. While nonbinding, the statement provides important guidance to creditors seeking to ensure that they conduct a sufficient ability-to-pay analysis.
Background
The statement follows the withdrawal of a joint CFPB and Department of Justice statement cautioning that creditor policies related to an applicant's immigration or citizenship status could, in certain circumstances, run afoul of ECOA's and Regulation B's prohibition of discrimination on a prohibited basis, including race and national origin. The agencies withdrew this statement in January 2026, stating that ECOA and Regulation B generally permit creditors to consider citizenship status and that the prior statement may have created confusion.
The recent statement also follows a number of recent developments related to immigration in financial services, including a May 19 executive order focused on mitigating fraud and credit risks to financial institutions posed by illegal immigration. It also closely follows a FinCEN advisory reminding businesses to be mindful of fraud schemes and other potential risks associated with the unlawful employment of illegal aliens. And while not related to fair lending per se, it also closely follows significant recent changes to Regulation B.
The Statement
The CFPB's statement reminds creditors that Regulation Z requires a reasonable and good-faith assessment of a consumer's ability to repay certain mortgage loans and requires credit card issuers to consider a consumer's ability to make required minimum periodic payments. In the Bureau's view, where a creditor relies on income from U.S.-based employment, and information in the application or other records indicates that the consumer's immigration status may affect continued access to that income, the creditor may be required to consider that information as part of its repayment analysis. The Bureau also emphasizes an important limiting principle: creditors need not account for future changes that cannot be reasonably anticipated from the application or records available at the relevant time.
Key Takeaways
- Immigration status may be relevant to repayment capacity in certain circumstances. Where a creditor has information that a credit applicant's U.S.-based employment income may not remain available because of that applicant's immigration status, the creditor may need to consider that information in assessing the applicant's ability to pay. However, the CFPB's statement does not say that creditors must make immigration status a universal underwriting factor.
- Creditors may wish to avoid categorical approaches to underwriting for immigration status, such as denying all credit applications to immigrants. In its statement, the CFPB does not provide specific guideposts on how immigration status should be considered in conducting an ability-to-repay analysis. It instead notes that "there are a wide variety of lawful immigration statuses" and implies that creditors should take a status-specific approach to conducting an ability-to-repay analysis. Aside from the CFPB's statement, there has been recent litigation under the Civil Rights Act against creditors that have allegedly used citizenship status as a hard cut in their underwriting models. Some state laws also apply. For example, California's Unruh Act makes it illegal for creditors to discriminate on the basis of "citizenship" and contains a private right of action that has led to litigation against creditors in the past. All told, creditors should consider avoiding a one-size-fits-all approach and tailor their analysis to an applicant's anticipated future cash flows rather than citizenship status. This may require learning more about different immigration statuses and how they may bear on a consumer's likelihood of continued employment in the U.S.
- This is part of a broader federal policy shift. The executive order also directs Treasury, the CFPB, and the federal banking regulators to consider additional guidance or rulemaking involving customer due diligence, suspicious activity typologies, and credit risks associated with non-work-authorized populations. As a result, institutions may want to keep an eye on these developments and update their compliance management systems accordingly as future guidance and rulemaking comes out.
Practical Implications
Financial institutions should consider whether existing policies, procedures, model governance, training, and documentation standards adequately reflect these developments. In particular, creditors may want to confirm that underwriting personnel understand when immigration-related information is relevant to repayment ability, how that information should be documented, and how to apply any such standards consistently.
Conclusion
All told, the CFPB's statement and other recent actions demonstrate the current administration's continued focus on immigration-related issues and provide guidance to financial institutions on some of the requirements they need to be mindful of.