Independent Banker - June 2022 - 27

PORTFOLIO
◎FOCUS COMPLIANCE
Finding purpose
in SPCPs
Last year, HUD officials announced that special purpose credit
programs-through which creditors can lend to financially
underserved populations-conform to federal law when certain
guidelines are met. How can community banks best use SPCPs
to target prospective loan borrowers? By Mary Thorson Wright
not treating people differently based
on race or other prohibited bases;
however, this is one case where
lenders are being asked, in essence,
to do just that. The point is to help
fill needs where there may have been
a wealth gap or homeownership gap,
or an identifiable community that has
been underserved. "
ommunity bankers are keenly
aware of the fair lending
prohibitions of Regulation B, the
Equal Credit Opportunity Act (ECOA)
and the Fair Housing Act. It can cause
bankers some uneasiness to create and
offer a product or service that depends
on what are typically described
as " prohibited bases " as program
qualifications, but special purpose
C
credit programs (SPCPs) create a
means by which creditors can better
serve segments of their communities
that may have been historically shut
out or otherwise disadvantaged.
" There can be uncertainty about
creating and offering SPCPs, "
says Michael Marshall, director of
regulatory legal affairs for ICBA.
" Conventional thinking supports
Regulation B states that a " creditor
shall not consider race, color,
religion, national origin or sex ... in
any aspect of a credit transaction. "
These prohibitions apply not only
to discrimination against racial and
ethnic minority groups, but also to
any consideration of race or ethnicity
in a credit transaction. Section 1002.8
of Regulation B permits a creditor
to extend special purpose credit
to applicants who meet eligibility
requirements under SPCP, even those
defined as prohibited bases.
The program(s) must be for
the benefit of an economically
disadvantaged class of persons;
independentbanker.org Q 27
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Independent Banker - June 2022

Table of Contents for the Digital Edition of Independent Banker - June 2022

Table of Contents
Independent Banker - June 2022 - Intro
Independent Banker - June 2022 - Cover1
Independent Banker - June 2022 - Cover2
Independent Banker - June 2022 - Table of Contents
Independent Banker - June 2022 - 2
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Independent Banker - June 2022 - Cover3
Independent Banker - June 2022 - Cover4
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