In addition to free housing and healthcare, illegal immigrants have another joyous reason to bust across the border – free money from banks, now blocked from considering “illegal immigrant” as a reason to deny loans.
The Consumer Financial Protection Bureau and Justice Department posted a joint statement on X, warning that lending institutions were banned from using immigration status to “illegally discriminate” against credit applicants. The CFPB issued this guidance in response to reports of individuals with “noncitizen status” being denied credit card, auto, student, personal, and equipment loans.
CFPB director Rohit Chopra praises the Biden administration for its threats against financial institutions that hold a pesky little thing like an “illegal” status against applicants. “Fair access to credit is crucially important for building wealth and strengthening household financial stability,” he observed, going on to add a puzzling addendum, “The CFPB will not allow companies to use immigration status as an excuse for illegal discrimination.”
The guidance from the Department of Justice (DOJ) emphasizes that denying individuals access to credit solely because of their immigrant status, whether real or perceived, may be in violation of federal law. The DOJ is urging lenders not to discriminate based on immigration status when it comes to providing loans for purposes such as home purchases or business development.
Kristen Clarke, the assistant attorney general of the DOJ’s Civil Rights Division, stressed the importance of preventing biased lending practices and ensuring that individuals are assessed for credit based on their ability to repay rather than their immigration status.
The joint statement clarifies that while it’s not inherently illegal to take a person’s immigration status into account when deciding whether to grant a loan, excessive reliance on this factor could potentially violate the law. The statement points to the Equal Credit Opportunity Act (ECOA), which prohibits discrimination based on factors like race, color, religion, and national origin in credit application evaluations. Although citizenship status is not explicitly mentioned as a protected attribute under the law, it can now be considered a “protected status” in loan decisions.
It’s still another slap in the face to lawful citizens who are unable to secure a loan because of the impact the Biden presidency has had on credit histories. A good credit score is the defining factor in a financial institution’s decision to lend money, and many Americans are finding that their scores are tanking because they are living on credit cards just to make ends meet.
But Illegal immigrants typically do not have established credit histories in the United States because they are often unable to access traditional financial services. Credit histories are built over time through activities such as opening bank accounts, obtaining credit cards, taking out loans, and making payments on time. However, these actions typically require a legal and documented presence in the country, as financial institutions and lenders typically require a social security number or a taxpayer identification number to track and report credit activities.
This seems like a strange battle for the Biden administration to fight with the banking industry in utter turmoil under his watch. But it’s not the first time the president has declared war on responsible citizens by rewarding bad behavior.
In May, the Biden administration enacted the Mortgage Redistribution Act, echoing the risky lending practices contributing to the 2008 housing market crash. The policy allows individuals who can’t afford loans to borrow money to purchase homes they wouldn’t typically qualify for financially. The burden of subsidizing these high-risk borrowers falls on those who choose to live within their means and purchase homes they can afford. Borrowers with strong credit scores now pay higher mortgage rates, while those with weaker borrowing power pay lower rates.
Borrowers with credit scores of 680 or higher are now paying an extra $40 per month on a $400,000 mortgage or an estimated additional cost of $14,000 over the life of the loan. Experts, such as Richard Stern from The Heritage Foundation, argued that credit scores exist to assess an individual’s ability to manage credit responsibly and that the policy creates a situation where those with lower credit ratings appear more creditworthy than those with high scores.
Guaranteed loans are just one more perk of being an undocumented immigrant in the U.S. They are also another reason for Americans to consider a journey south of the border and a refreshing swim back across so they can be eligible for Biden’s incentives.