The Department of Housing and Urban Development announced Aug. 30 that it led an interagency effort to rescind the Biden administration’s 2022 joint statement supporting Special Purpose Credit Programs. The programs encouraged lenders to consider race as a factor in extending credit to underserved communities.
The rescission reverses guidance from multiple federal financial regulators, including the Consumer Financial Protection Bureau, the Office of the Comptroller of the Currency, the FDIC, and the Federal Reserve, HUD announced. The action represents one of the most significant fair lending policy reversals of the current administration.
Special Purpose Credit Programs were designed to expand lending access to minority communities and other underserved populations by allowing lenders to create targeted products. The Biden-era guidance encouraged banks, credit unions, and other financial institutions to develop these programs.
The rescission moves federal fair lending policy from a race-conscious framework toward a race-neutral approach, HUD said. Lenders that developed SPCPs in reliance on the now-rescinded statement will need to reassess their programs.
For minority borrowers, the change could reduce access to targeted lending products that were designed to address longstanding disparities in homeownership and credit access. Black and Hispanic homeownership rates have historically trailed white homeownership rates by significant margins.
Community banks and credit unions that invested in developing SPCPs face immediate uncertainty about whether those programs remain legally defensible without the interagency guidance that supported them.
Fair housing and lending advocates have argued that SPCPs are a necessary tool to address structural lending disparities. Opponents have contended that race-conscious lending programs raise equal protection concerns and that credit access should be expanded through race-neutral means.