The Department of Housing and Urban Development led an interagency effort to rescind a 2022 statement that had encouraged lenders to develop targeted loan programs for underserved racial and ethnic groups through Special Purpose Credit Programs, on Aug. 25.
The rescission removes regulatory support for race-conscious lending products across the financial services sector. The 2022 guidance had given banks and community development financial institutions a green light to design SPCPs offering favorable terms to borrowers from demographics that have historically faced discrimination in mortgage lending.
The action eliminates a significant policy tool that lenders had used to narrow the racial homeownership gap, which remains one of the widest wealth disparities in the United States. Black homeownership rates trail white homeownership rates by roughly 30 percentage points nationally.
HUD led the interagency action, though the other participating agencies were not identified in available release content. The Equal Credit Opportunity Act, which authorizes SPCPs, remains in effect; the rescission removes the interagency endorsement that had encouraged their use, not the underlying legal authority.
Several major banks and mortgage lenders had developed SPCP-compliant products in response to the 2022 guidance. Those institutions must now decide whether to continue offering the programs without explicit federal regulatory support or scale them back.
Civil rights organizations are expected to challenge the rescission, arguing it undermines the government’s obligation to affirmatively further fair housing. The National Fair Housing Alliance and similar groups have characterized SPCPs as one of the most effective tools for addressing lending discrimination’s legacy.
The mortgage industry’s response may be mixed. Some lenders viewed SPCPs as both good policy and good business, opening access to creditworthy borrowers who had been underserved. Others had been cautious about race-conscious programs even with federal support.
The rescission aligns with the administration’s broader approach of rolling back race-conscious policies across federal agencies.