Agencies make clear: Special-purpose credit programs available to underserved communities

Special-purpose credit programs to meet the credit needs of specified classes of persons – particularly those of underserved communities – are available under federal law and regulations, the federal financial institution regulators, and federal housing and law enforcement agencies, said in an interagency statement Tuesday.

The statement, according to the federal agencies, was issued as a reminder to creditors.

“Many financial institutions have publicly committed billions of dollars to better meet the needs of underserved communities, and the statement calls attention to the special purpose credit options under the Equal Credit Opportunity Act (ECOA) and Regulation B,” the agencies said.

In addition to the federal banking agencies, the National Credit Union Administration (NCUA), and the Consumer Financial Protection Bureau (CFPB), signers of the statement included the Department of Housing and Urban Development (HUD), the Department of Justice (DOJ), and the Federal Housing Finance Agency (FHFA).

According to a financial institution letter issued by the Federal Deposit Insurance Corp. (FDIC FIL-08-2022), stakeholders had expressed “uncertainty” about the treatment of ECOA and Reg B special-purpose credit programs under the Fair Housing Act (FHA).

“On December 7, 2021, HUD released guidance concluding that special purpose credit programs instituted in conformity with ECOA and Regulation B generally do not violate the FHA,” the FIL stated. “Accordingly, creditors may consider the use of special purpose credit programs across all types of credit covered by ECOA and Regulation B.”

The FIL said the statement encourages agencies to “explore opportunities to develop special purpose credit programs consistent with ECOA and Regulation B requirements as well as applicable safe and sound lending principles.”

FIL-08-2022: Interagency Statement on Special Purpose Credit Programs Under the Equal Credit Opportunity Act and Regulation B