“ECOA became law in 1974 and it prevents banks from denying you a loan or credit card because of who you are and things over which you have no control, such as your race, your gender, your skin color, your religion, your age and whether or not you are married,” Bailey says in the video. “This is a law that gives us women the ability to go to a bank and get a fair loan for a house without a male co-signer signing on our behalf.”
Mortgage veteran Faith Schwartz, founder and CEO of Housing Finance Strategiesshared Bailey’s video on LinkedIn and urged mortgage leaders to provide feedback to the CFPB before the comment period ends on December 15. It has now been re-shared by others and the comments suggesting the issue had come to the attention of many in the industry, who expressed shock at the proposal.
What does the proposal say?
In addition to eliminating the CFPB’s recognition of disparate impact claims, the proposal would also tighten the definition of what counts as discouraging applicants – reducing the situations in which lenders could be held responsible for actions or statements that could deter people from applying for credit.
Additionally, the rule would revise standards for SPCPs, allowing lenders to offer targeted loans to underserved groups without breaking the law.
The proposal said the changes are intended to clarify lenders’ obligations and make it easier to comply with the law. Critics, including fair lending advocates, warned that the proposal could reduce access to credit for women, communities of color and rural residents.
NFHA released a public statement When the proposal was announced, it said it was “strongly opposed” to the changes. NFHA President and CEO Lisa Rice called the proposed rule change “unconscionable” and said it “should never go into effect.”
Rice continued, “The proposed rule changes are a death knell for lenders. Disparate impact is a driver of business growth, and any company that wants to remain viable and competitive will continue to use this critical tool… These actions ignore mountains of evidence that reveal persistent lending bias, are an attack on decades of established fair lending law, and would promote discrimination in our lending markets. They are a continuation of this administration’s attack on protections against redlining. For these reasons and more, this rule should never be proclaimed.”
Rice added that by eliminating the long-standing “impact test” under the ECOA, this rule would “remove one of the most powerful tools for uncovering and remediating systemic biases in lending.”
“This reckless proposal would encourage discriminatory practices, undermine the enforcement of civil rights, and set back generations of progress toward economic justice, while threatening the health of the economy,” she said.
The agency has not responded to this from HousingWire request for comment regarding NFHA’s opposition when this story was published.
A guideline from April 2025
The proposal builds on this an order from April 2025 from the Trump administration, which orders federal agencies to stop using the legal theory known as “disparate-impact liability” in enforcing civil rights laws.
According to the decision, requiring companies to prevent discriminatory outcomes in practice could encourage favoritism. “Disparate impact liability has hindered companies from making hiring and other employment decisions based on merit and skill, their needs, or the needs of their customers, because of the specter that such a process could lead to disparate outcomes, and thus lawsuits with disparate consequences,” the order reads.
The CFPB is seeking public comment on the proposal by December 15.
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