On May 11, 2015, the CFPB issued Bulletin 2015-02 (click here) to advise lenders regarding illegal discrimination against applicants that use income from the Section 8 Housing Choice Voucher Homeownership Program (“Section 8 HCV Program”), which was created to assist low-income, first-time homebuyers in purchasing homes. The Section 8 HCV Program is funded by HUD and administered by local public housing authorities and provides an eligible consumer with a monthly housing assistance payment to help defer homeownership expenses associated with a home purchased by the consumer. Under ECOA and Regulation B, such payments are income derived from a “public assistance program” that may not be a basis for discriminating against an applicant regarding any aspect of a credit transaction (15 USC §1691(a)(2); 12 CFR 1002.2(z), 1002.4(a); comment 1002.2(z)-3). Bulletin 2015-02 warns: “Disparate treatment prohibited under ECOA and Regulation B may exist when a creditor … excludes or refuses to consider [Section 8 HCV Program] vouchers as a source of income or accept the vouchers only for certain mortgage loan products or delivery channels. ECOA and Regulation B may also be violated if an underwriting policy regarding income has a disproportionately negative impact on a prohibited basis, even though the creditor has no intent to discriminate and the practice appears neutral on its face, unless the creditor practice meets a legitimate business need that cannot reasonably be achieved as well by means that are less disparate in their impact.”
