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CFPB Provides Guidance to Help Lenders Avoid Discrimination against Consumers Receiving Public Housing Assistance
Wednesday, May 13, 2015 6:25 AM

Yesterday, the Consumer Financial Protection Bureau issued a bulletin to help mortgage lenders avoid illegal discrimination against applicants whose income includes vouchers from the Section 8 Housing Choice Voucher (HCV) Homeownership Program. Discriminating against a consumer because some or all of their income is from a public assistance program may violate federal fair lending protections.

“Everyone deserves the opportunity to qualify for a mortgage that they can afford, based on their stable income,” said CFPB Director Richard Cordray.  “Consumers should not be put at a disadvantage just because they receive public assistance.”

The bulletin is available at:

The Section 8 Housing Choice Voucher Homeownership Program was created to assist low-income, first-time homebuyers in purchasing homes. The program is funded by the Department of Housing and Urban Development and administered by participating local public housing authorities.

Participating public housing authorities can provide an eligible consumer with a monthly housing assistance payment to help offset homeownership expenses. The CFPB has become aware of financial institutions excluding or refusing to consider income derived from this program during the loan application and underwriting process. The CFPB has also become aware of some institutions only permitting the vouchers to be used for certain mortgage loan products or delivery channels.

The Equal Credit Opportunity Act (ECOA) prohibits creditors from discriminating against an applicant because some or all of the applicant’s income is from a public assistance program, such as the Section 8 HCV Homeownership Program. Excluding or refusing to consider these vouchers as a source of income categorically, or accepting the vouchers only for certain types of mortgage loans, may violate ECOA and its implementing regulation, Regulation B.

This bulletin offers guidance for lenders in managing their fair lending risk, including the importance of clear underwriting policies, providing training for underwriters and loan originators, and ensuring careful monitoring for compliance with underwriting policies.