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#2260137 - 09/23/21 02:46 PM Lending to Non US Citizens
terpsfan Offline
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Joined: Feb 2007
Posts: 2,058
It has been our practice to not lend to non US Citizens for collection reasons. We are considering opening this up to permanent residents as well with active green cards. Would there be an fair lending issues with this practice?

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Lending Compliance
#2260138 - 09/23/21 02:49 PM Re: Lending to Non US Citizens terpsfan
rlcarey Online
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rlcarey
Joined: Jul 2001
Posts: 83,219
Galveston, TX
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.
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#2290304 - 11/01/23 03:55 PM Re: Lending to Non US Citizens terpsfan
terpsfan Offline
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Joined: Feb 2007
Posts: 2,058
With regards to the CFPB statement is the key word "groups" meaning as long as our policy covers all noncitizens there should not be an issue?

For example, if a creditor has a blanket policy of refusing to consider applications from certain
groups of noncitizens regardless of the credit qualifications of individual borrowers within that
group, that policy may risk violating ECOA and Regulation B. This risk could arise because some
individuals within those groups may have sufficient credit scores or other individual circumstances
that may resolve concerns about the creditor’s rights and remedies regarding repayment.

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#2290315 - 11/01/23 06:15 PM Re: Lending to Non US Citizens terpsfan
rainman Offline
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rainman
Joined: Nov 2004
Posts: 3,237
Take note of the language starting at the bottom of p.2 of the CFPB/DOJ publication indicating that Reg. B is not the only consideration. There have been claims on behalf of DACA recipients under 42 USC 1981, The court rulings in some of the cases cited in the footnotes of the CFPB/DOJ cases show that while it might not violate Reg. B to exclude all non-citizens, that doesn't mean that such a policy is permissible under 42 USC 1981.
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#2290336 - 11/02/23 12:54 PM Re: Lending to Non US Citizens terpsfan
Dan Persfull Offline
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Dan Persfull
Joined: Aug 2002
Posts: 47,517
Bloomington, IN
as long as our policy covers all noncitizens there should not be an issue?

The issue I see with this is that one proverbial exception that is going to eventually be made.

We do not base it on citizenship, we base it on their immigration status. If they answer no to the citizenship question then we ask for a copy of their Visa to demonstrate they are a resident alien (temporary or permanent) and we then look at it based on how long they have been here, their job and income status and the expiration of their Visa if it is temporary.
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The opinions expressed are mine and they are not to be taken as legal advice.

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