CFPB issues new guidance for mortgage lenders

The Consumer Financial Protection Bureau (CFPB) has released new guidance to help mortgage lenders avoid discriminating against people who receive public assistance.

Discriminating against a consumers, whose incomes includes vouchers from the Section 8 Housing Choice Voucher Homeownership program, CFPB said may violate federal fair lending protections.

Participating public housing authorities can provide eligible consumers with monthly housing assistance payment to help offset homeownership expenses, but CFPB said some financial institutions are excluding or refusing to consider income derived from this program during the loan application and underwriting process.


Some institutions the agency said only allow vouchers to be used for certain mortgage loan products or delivery channels.

In a bulletin to mortgage lenders, CFPB said the Equal Credit Opportunity Act, lenders can consider whether an applicant’s income is derived from public assistance in evaluating creditworthiness, but the creditor cannot automatically discount or exclude from consideration any protected income like a Section 8 housing voucher.

“Everyone deserves the opportunity to qualify for a mortgage that they can afford, based on their stable income,” said CFPB Director Richard Cordray said in a news release.  “Consumers should not be put at a disadvantage just because they receive public assistance.”