The Equal Credit Opportunity Act of 1974 (ECOA) prohibits creditors from discriminating against any applicant of a protected class with respect to any aspect of a credit transaction. A rarely used provision within ECOA, however, permits Special Purpose Credit Programs to meet special social needs. In December 2021, the Department of Housing and Urban Development (HUD) clarified that, so long as certain criteria were met, lenders could utilize SPCPs without violating anti-discrimination protections found within the Fair Housing Act.  

Earlier this year, the Urban Institute, a nonprofit economic and social policy research organization, shared findings of large gaps in household income and homeownership between racial groups in the U.S. since the 2008 recession. They found that households of color are at a significant disadvantage when receiving the financial assistance and protection needed to secure and sustain homeownership. 

In 2019, white households reported an average household income of more than seven times the average Black family and over five times higher than the average Hispanic family. Black homeowners are paying on average $67,000 more in home investments than the average white homeowner to account for higher mortgage rates, mortgage insurance premiums and property taxes.  

The process of building an SPCP begins with assessing the need for such a program, primarily using public data sources like the US Census and HMDA. The Mortgage Bankers Association provides a detailed sample timeline, and a wealth of other resources at 

While building affordable housing continues to be important, there is simultaneously a need to advance credit equity. Special Purpose Credit Programs may help bridge the race gap in homeownership.