The Department of Housing and Urban Development (HUD) issued yesterday a statement and legal opinion supporting the use of Special Purpose Credit Programs (SPCPs). HUD provided guidance that where an SPCP is compliant with the Equal Credit Opportunity Act (ECOA) and its implementing Regulation B, it does not violate the Fair Housing Act. This clear and unequivocal statement from HUD removes any regulatory uncertainty that might have made banks nervous about considering race and ethnicity in making mortgage loans more accessible to underserved communities.
HUD’s action was long overdue. HUD’s guidance ended decades of silence on the issue by the agency and is completely consistent with the Biden administration’s goal of addressing the racial wealth gap. Civil rights groups, other federal agencies and even the legal community representing banks consistently advocated for HUD to acknowledge that SPCPs were compliant with the FHA.
It is now time for banks to take the next important step and put their private resources into programs that complement federal efforts. Although Congress is still debating the final language of the Build Bank Better Act, banks can move forward today with full regulatory support in implementing sustainable and equitable SPCPs that not only serve their communities, but broaden the diversity of their clients. It is not only the right thing to do, it is good business.
Brad Blower is NCRC’s General Counsel.