On June 8, the CFPB issued a statement in the Federal Register reminding creditors of their obligations under TILA and Regulation Z when assessing consumers’ ability to repay (ATR), consistent with Executive Order 14406, “Restoring Integrity to America’s Financial System” (previously covered by InfoBytes here). The statement applies to ATR determinations for dwelling-secured transactions, including mortgages, and to the ability-to-pay requirements for certain open-end credit products, including credit cards. The Bureau stated that these requirements may obligate creditors to consider a consumer’s immigration status, particularly where removal from the U.S. could disrupt the consumer’s income.

The CFPB noted that Regulation B permits creditors to consider immigration status and information needed to evaluate rights and remedies regarding repayment. The statement provides that creditors relying on U.S.-based employment income are permitted “and may, under certain facts and circumstances, be obligated” to consider immigration-related information affecting whether the consumer can continue earning that income when U.S. residence is necessary for the work. The Bureau stated that this obligation arises when a consumer’s application or other records indicate that repayment ability will change because of immigration status, and that failing to consider such information may risk an unreasonable ATR assessment.

The statement further provides that a creditor may regard an applicant who is neither lawfully present nor permitted to work in the U.S. as subject to removal, and that indications of potential removal risk may come from direct inquiry or atypical identification methods, such as an Individual Taxpayer Identification Number. The Bureau emphasized that it was not providing a comprehensive analysis of how different immigration statuses affect repayment expectations, but said lenders may consider immigration status, lawful presence, work authorization, and other removal-risk factors when relevant to current or “reasonably expected” U.S.-based employment income. The statement is guidance, does not have the force or effect of law, and has no legally binding effect outside the federal government.