WASHINGTON (5/13/15)--New guidance issued Tuesday by the Consumer Financial Protection Bureau (CFPB) is designed to help lenders avoid illegal discrimination against consumers receiving public housing assistance.
According to the bureau, the guidance was issued to ensure non-discriminatory access to credit for applicants whose income includes vouchers from the Section 8 Housing Choice Voucher (HCV) Homeownership Program.
Section 8 HCV was created to assist low-income, first-time homebuyers. The Equal Credit Opportunity Act prohibits discrimination against applicants receiving vouchers as a portion of their income.
According to the CFPB bulletin, the bureau has become aware of institutions excluding or refusing to consider income derived from the Section 8 HCV program.
“In considering the separate components of an applicant's income, the creditor may not automatically discount or exclude from consideration any protected income,” the bulletin reads. “Any discounting or exclusion must be based on the applicant's actual circumstances.”
The bulletin also recommends that lenders clearly articulate underwriting policies regarding income derived from public assistance programs. This includes training of underwriters, mortgage loan originators and other involved in the origination process, as well as careful monitoring for compliance to such policies.