The interagency statement is the latest effort by regulators to give lenders the all-clear when it comes to special purpose credit programs.
In December 2021, HUD resolved long standing questions about whether special purpose programs would violate the fair housing act.
A year prior, the CFPB, gave directions for how for-profit organizations could implement special purpose credit programs without running afoul of ECOA. The watchdog agency provided clarity for the kind of research and data that go into creating a targeted lending program.
CFPB officials have also since made public statements in support of the programs. Acting Director David Uejio spoke in September 2021 about how special purpose credit programs “serve as an important tool” for mortgage lenders to assist underserved borrowers.
Special purpose credit programs, Uejio said, are “also a recognition that government alone cannot solve this problem.”
For the programs to have an impact — as Congress envisioned 45 years ago — regulators need lenders’ buy-in. Yet mortgage lenders are still reluctant to implement the targeted lending programs. The CFPB does not have data on the number and variety of SPCPs currently in existence, an agency spokesperson said.
Mortgage lenders still have reservations about implementing targeted lending programs. That there is no safe harbor for special purpose credit programs is a sticking point, said Andy Arculin, a partner at Blank Rome LLP, who was previously senior counsel in the CFPB’s Office of Regulations.
Lenders are expected to implement the programs, Arculin said, but they then may get examined for compliance, or sued for violating ECOA.
“If the regulators were willing to give someone a decision with a safe harbor behind it, lenders would be much more inclined to develop the programs,” said Arculin. “If you don’t have assurances it’s bulletproof or kosher, it’s a risk.”