The CFPB issued a bulletin to help mortgage lenders avoid illegal discrimination against applicants whose income includes vouchers from the Section 8 Housing Choice Voucher (HCV) Homeownership Program. Lenders that discriminate against a consumers because some or all of their income is from a public assistance program may violate federal lending protections, such as the Equal Credit Opportunity Act (ECOA).
The Section 8 HVC Homeownership Program assists low-income, first-time homebuyers in purchasing homes and provides eligible participants with monthly housing assistances payment to help offset homeownership expenses. Under the ECOA, financial institutions may neither exclude or refuse to consider income derived from this program during the loan application and underwriting process, nor only permit the vouchers to be used for certain mortgage loan products or delivery channels.
The CFPB’s bulletin offers guidance for lenders in managing their fair lending risk, including the importance of clear underwriting policies, providing training for underwriters and loan originators and ensuring careful monitoring for compliance with underwriting policies.
Read the bulletin.