Seven Agencies Have Withdrawn the Guidance That Encouraged Special Purpose Credit Programs

A special purpose credit program is a lending program aimed at a defined class of borrowers — a down-payment assistance product for a particular area, say, or a small-business loan fund. In February 2022 a group of federal agencies published a statement encouraging lenders to establish them and offering assurances that they were permissible. That statement has now been withdrawn.

What was rescinded, and by whom

Seven agencies signed the rescission notice: the FDIC, the National Credit Union Administration, the OCC, the CFPB, HUD, the Justice Department and the Federal Housing Finance Agency. It withdraws the February 22, 2022 interagency statement together with related HUD and CFPB guidance documents issued in 2020 and 2021, and takes effect on publication in the Federal Register. The Federal Reserve joined the original statement and is not a signatory to the rescission.

The reasons the agencies give

• The 2022 statement referenced a version of Regulation B that has since been amended.
• It relied in part on HUD guidance concerning the Fair Housing Act that is no longer in effect.
• The agencies say the earlier positions cannot be reconciled with the statutory text of ECOA and the Fair Housing Act.
• The notice states that federal law does not authorise any generalised remedial equity initiatives absent specific cases of unlawful discrimination.
• It cites executive orders on deregulation and on ending discrimination programs, and the Supreme Court's heightened scrutiny standard for race-based policies.

What lenders are told to do

Creditors should no longer rely on the prior guidance. Programs must comply with ECOA, Regulation B and, where applicable, the Fair Housing Act. The notice rescinds guidance; it does not amend a regulation.

No regulation or interagency statement fixated on the Biden administration's DEI commitments can defeat the Fair Housing Act's categorical prohibition against discriminating on the basis of race and color in any residential real estate-related transaction.

Harmeet Dhillon of the Justice Department said in the same announcement that it is illegal to favour individuals for housing benefits, mortgage loans or any credit programs on the basis of protected characteristics such as race.

Why it matters to a borrower

Guidance is not law, and withdrawing it does not by itself close a program. What it removes is the assurance lenders were given in 2022 that these programs were permissible — and lenders price legal uncertainty into whether they keep offering something. Anyone who was counting on a particular down-payment assistance or small-business product is better served asking that lender directly whether it is still on offer than assuming an answer in either direction.