The Department of Housing and Urban Development led a multiagency effort on Aug. 25 to rescind a 2022 interagency policy statement that had supported Special Purpose Credit Programs, which allow lenders to target credit products to historically underserved populations.
The rescission removes the federal endorsement framework established in 2022 that had encouraged banks and lenders to design mortgage and small business credit products specifically for minority and low-income borrowers under the Equal Credit Opportunity Act, according to HUD.
Special Purpose Credit Programs operate under a provision of the Equal Credit Opportunity Act that permits creditors to offer favorable terms to applicants who share a common characteristic, such as race, age or income level, if the creditor determines the group has been historically denied access to credit. The 2022 interagency statement had provided regulatory clarity and encouragement for lenders to use this authority.
The rollback does not eliminate SPCPs as a legal tool under ECOA but removes the federal government’s explicit policy support for their use, according to the announcement.
Civil rights organizations and fair housing advocates are expected to oppose the move as a rollback of fair lending protections. Several major banks launched SPCP-based mortgage programs in 2022 and 2023, specifically targeting Black and Hispanic homebuyers in response to the interagency statement.
For American borrowers in underserved communities, the rescission could lead lenders to scale back or discontinue targeted credit programs designed to close persistent gaps in homeownership and small business lending rates.
The multiagency nature of the rescission suggests coordination among federal financial regulators, though the specific agencies joining HUD were not detailed in the announcement.