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By Kerry Smith<\/div><\/div>\n

HUD legal opinion: Special Purpose Credit Programs \u2013 a type designed to correct past lending shortfalls to protected groups \u2013 are legal under the Fair Housing Act.<\/span><\/span><\/p>\n<\/div>\n

WASHINGTON \u2013 Can a lender legally create a special program for communities that have historically experienced lending discrimination?<\/span><\/span><\/p>\n

Yes, according to a legal decision<\/a> rendered by the Department of Housing and Urban Development (HUD).<\/span><\/span><\/p>\n

In 1976, Congress created Special Purpose Credit Programs (SPCP) when it amended the Equal Credit Opportunity Act (ECOA). The SPCPs were created to \u201chelp remedy longstanding discrimination in credit markets,\u201d noting that \u201csuch remedial programs do not themselves constitute unlawful discrimination.\u201d<\/span><\/span><\/p>\n

However, HUD says a number of lenders haven\u2019t created programs because they\u2019re \u201cworried that those programs may run afoul of the Fair Housing Act and other federal anti-discrimination laws.\u201d<\/span><\/span><\/p>\n

HUD\u2019s legal opinion, released Monday, makes it clear that in HUD\u2019s opinion, the Fair Housing Act doesn\u2019t pose a threat to creating an SPCP.<\/span><\/span><\/p>\n

According to HUD, the Fair Housing Act \u201cprohibits discrimination in the sale or rental of housing \u2026 based on race, color, religion, sex, disability, familial status, or national origin.\u201d However, it\u2019s not \u201climited to preventing discrimination alone, as Congress included an affirmative provision requiring the federal government to take a proactive role in redressing longstanding housing discrimination.\u201d<\/span><\/span><\/p>\n

It says SPCPs should be \u201ccarefully tailored,\u201d but they generally don\u2019t discriminate within the meaning of the Fair Housing Act, \u201cjust as they do not constitute discrimination under ECOA.\u201d<\/span><\/span><\/p>\n

The response by housing groups was positive.<\/span><\/span><\/p>\n

\u201cSpecial Purpose Credit Programs are an innovative approach to addressing a problem that has persisted for decades,\u201d says National Association of Realtors\u00ae President Leslie Rouda Smith. \u201cWe look forward to learning more about these programs and how they can potentially benefit homebuyers around the country.\u201d<\/span><\/span><\/p>\n

Bob Broeksmit, CMB, president and CEO of the Mortgage Bankers Association, says he appreciates HUD\u2019s clarification.<\/span><\/span><\/p>\n

\u201cSPCPs exist to help low-income and historically disadvantaged borrowers, and this clarification is an important step in providing lenders additional tools to help these borrowers purchase a home,\u201d Broeksmit says. \u201cWe look forward to working with HUD, the CFPB, and other regulators to assist in the expansion of compliant SPCPs to meet their potential for assisting communities and reducing the racial homeownership gap.\u201d<\/span><\/span><\/p>\n

\u00a9 2021 Florida Realtors\u00ae<\/span><\/span><\/p>\n<\/div><\/div>\n

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\nAuthor: kerrys<\/p>\n","protected":false},"excerpt":{"rendered":"