The Trump administration is once again dropping the hammer on illegal immigration, this time canceling a rule that was put in place by the Biden administration that forced banks to overlook immigration status for loan applications. The Consumer Financial Protection Bureau, working in tandem with the Justice Department, tossed out former President Joe Biden’s guidelines ordering lenders not to take a person’s immigration status into consideration when making decisions about loan and credit applications.
The rule itself had serious implications for mortgages, credit cards, and auto loans. Biden’s administration attempted to justify the rule by saying that considering a person’s immigration status would be a violation of anti-racism laws that are in place to ensure equal and fair lending practices. In reality, the rules were created to provide an anchor for illegal and temporary visa workers in communities across the country by enabling them to have cash for homes, vehicles, and apartment leases.
However, the Trump administration says the rule was inappropriate and went too far, stating that taking an individual’s immigration status into consideration when reviewing loan applications does not violate the 1974 Equal Credit Opportunity Act. “We are correcting the last administration’s attempt to ignore these well-accepted and common-sense principles of our nation’s fair lending laws,” acting CFPB Director Russell Vought said about the rule being tossed out.
According to Breitbart News, the Biden administration had issued a warning saying that “unnecessary or overbroad reliance on immigration status may run afoul of ECOA’s antidiscrimination provisions.” The Trump administration’s interpretation of the rule says that Biden’s proclamation is without regulatory or statutory basis.
“This administration is restoring alignment with established federal civil rights law rather than continuing the prior administration’s ideologically driven departures,” Harmeet K. Dhillon, Trump’s assistant attorney general for the DOJ’s Civil Rights Division, explained. When Biden’s rule was first put into place in 2023, many complaints were made, one coming from then-Ohio Sen. JD Vance.
When Biden made the rule, Vance said that considering immigration status as part of the process for vetting loans was “nothing short of common sense.” A letter from the Senate which was signed by the future vice president and “every other Republican on the Senate Banking Committee” in November 2023 said, “A borrower’s likelihood of repayment significantly falls if there is no guarantee that they will be residing in the same community, let alone the same country or legal system.”
“Financial institutions are right to be concerned that they may never see a return on loans issued to illegal immigrants,” then-Sen. Vance went on to say in a press release. “If someone is deported to their home country, how is a bank in Ohio supposed to recoup the loan it was forced to issue? The federal government should be cracking down on illegal immigration — not encouraging more of it.”
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Getting rid of Biden’s rule was part of President Donald Trump’s presidential campaign platform in 2024. According to CNN, President Trump gave a speech at the Economic Club of New York where he promised to end mortgages for illegal aliens in order to address the housing affordability crisis that was increasing due to illegal immigrants pushing up the cost of housing.