Our bank is a very small bank with strict lending guidelines and lending areas. We recently had a non resident alien come in inquiring about a loan. With the potential of a non resident alien leaving the country or possibility of deportation, can the bank from a risk standpoint say we don't lend to non alien residents and not create a fair lending issue?

Reg B - Paragraph 6(b)(7)

1. National origin—immigration status. The applicant's immigration status and ties to the community (such as employment and continued residence in the area) could have a bearing on a creditor's ability to obtain repayment. Accordingly, the creditor may consider immigration status and differentiate, for example, between a noncitizen who is a long-time resident with permanent resident status and a noncitizen who is temporarily in this country on a student visa.

2. National origin—citizenship. A denial of credit on the ground that an applicant is not a United States citizen is not per se discrimination based on national origin.

MRS8 - Like Randy provided in the citations, it's more so a bank decision.

Make sure it is in policy, with an explanation for why. The regulation provides guidance, explain the risk and collection issues. Enforce for all.

Totally agree with Carey and Rocky, just wanted to add...if you aren't consistent in being either all in or all out with regard to immigrant status, if you pick an choose countries then they can argue that it is a proxy for race, etc. So you need a legitimate business reason (that you can defend) or be all in or all out so you don't have to defend it.

California conundrum: Although Reg B permits a creditor to consider citizenship and immigration status, California's "Unruh Act" prohibits discrimination based on primary language, citizenship and immigration status. So, if a creditor relies on Reg B to deny a loan based on immigration status, then the creditor will be in violation of the Unruh Act.

Thank you Tarhe for the state information.