Letter to Credit Unions 22-CU-03: Special Purpose Credit Programs

Letter to Credit Unions 22-CU-03: Special Purpose Credit Programs
February 2022

NCUA’s LTCU outlines the interagency statement reminding creditors of the ability under the Equal Credit Opportunity Act (ECOA) and Regulation B to establish special purpose credit programs (SPCPs) to meet the credit needs of economically or socially disadvantaged consumers and commercial enterprises. The SPCPs create a narrow exception to the ECOA prohibition against discriminating against an applicant on a prohibited basis and Regulation B’s prohibition against considering “race, color, religion, national origin, or sex … in any aspect of a credit transaction.”

The statement explains that ECOA and Regulation B permit creditors to extend special purpose credit offered pursuant to:

• Any credit assistance program expressly authorized by federal or state law for the benefit of an economically disadvantaged class of persons;
• Any credit assistance program offered by a not-for-profit organization for the benefit of its members or an economically disadvantaged class of persons; or
• Any special purpose credit program offered by a for-profit organization, or in which such an organization participates to meet special social needs, if it meets certain standards prescribed in regulations by the Consumer Financial Protection Bureau (CFPB).

Credit unions, as not-for-profit organizations, fall under the second category, although some programs that credit unions participate in may also fall under the first.

For more on SPCPs, see the CFPB website: https://www.consumerfinance.gov/rules-policy/regulations/1002/8/.