Each month, Quantivate provides our blog readers with access to the top attorney-generated compliance alert our customers receive. While there were 12 alerts and advisories to be aware of in March, this month the biggest to come into effect was an advisory to all financial institutions reminding them of the ability to establish special-purpose credit programs.
Five federal financial institution regulatory agencies, in connection with the Department of Housing and Urban Development (HUD), the Federal Housing Administration (FHA), and the Department of Justice (DoJ), issued an Interagency Statement to remind creditors of the ability to establish special-purpose credit programs (SPCPs) under the Equal Credit Opportunity Act (ECOA) and Regulation B to meet the credit needs of specified classes of persons.
SPCPs are credit assistance programs for economically or socially disadvantaged consumers and commercial enterprises.
In connection with the Interagency Statement, the NCUA issued Letter to Credit Unions 22-CU-03, and the FDIC issued Financial Institution Letter FIL‑08-2022.
The Interagency Statement explains that ECOA and Regulation B permit creditors to extend special-purpose credit offered pursuant to—
The Interagency Statement notes that some stakeholders previously expressed uncertainty as to the treatment of ECOA and Regulation B special-purpose credit programs under the Fair Housing Act. On December 7, 2021, HUD released guidance concluding that special purpose credit programs instituted in conformity with ECOA and Regulation B generally do not violate the FHA. Accordingly, financial institutions may consider the use of special-purpose credit programs across all types of credit covered by ECOA and Regulation B. The Interagency Statement also clarifies that the agencies do not determine whether a program qualifies for special purpose credit status. Accordingly, financial institutions must determine whether their program qualifies for special purpose credit status. The agencies encourage all financial institutions to consider using an SPCP to provide credit to economically disadvantaged individuals, consistent with ECOA and Regulation B requirements as well as applicable safe and sound lending principles.
The full announcement and corresponding letter from the FDIC can be found below.
|Interagency Statement on Special Purpose Credit Programs Under ECOA and Reg. B
|NCUA Letter to Credit Unions – Special Purpose Credit Programs
|FDIC Financial Institution Letter – Special Purpose Credit Programs
In March, Quantivate Compliance Management Services customers were made aware of 12 compliance alerts and advisories that will impact banks and credit unions soon. In partnership with business law firm Farleigh Wada Witt, Quantivate customers can access integrated regulatory change alerts featuring executive summaries, in-depth documentation, and action plans.
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