After the proposal was published, Nikitra Bailey, executive vice president of the National Fair Housing Alliance (NFHA) presented its reasons for opposing the change before Congress and has now posted a video on YouTube outlining its concerns.
“ECOA became law in 1974 and prevents banks from denying you a loan or credit card because of who you are and things you can’t control, like your race, your gender, your skin color, your religion, your age, and whether you’re married or not,” Bailey says in the video. “This is a law that gave us women the ability to go to a bank and get a fair loan for a house without a male guarantor signing on our behalf.”
Faith Schwartz, mortgage industry veteran, founder and CEO of Home financing strategiesshared Bailey’s video on LinkedIn and supposedly mortgage leaders to provide comments to the CFPB before the comment period ends on December 15. It has now been shared by others and the comments suggest the issue had gone unnoticed by many in the industry, who expressed surprise at the proposal.
What’s in the proposal?
In addition to eliminating the CFPB’s recognition of disparate impact claims, the proposal would also tighten the definition of what is considered discouraging to applicants, reducing situations in which lenders could be held liable for actions or statements that could discourage people from applying for credit.
Additionally, the rule would revise standards for SPCPs, which allow lenders to offer targeted loans to underserved groups without violating the law.
The proposal said the changes are intended to clarify lenders’ obligations and make it easier to comply with the law. Critics, including fair lending advocates, warned that the proposal could reduce access to credit for women, communities of color and rural residents.
NFHA issued a public statement when the proposal was announced saying it “vehemently opposes” the changes. NFHA President and CEO Lisa Rice called the proposed rule change “unconscionable” and said it “should never go into effect.”
Rice continued: “The proposed rule changes are a death knell for lenders. Disparate impact is a driver of business growth and any business that wants to remain viable and competitive will continue to use this critical tool…These actions ignore reams of evidence that reveal ongoing credit bias, are an assault on decades of established fair lending laws, and would promote discrimination in our credit markets. They are a continuation of this administration’s attack on redlining protections. For these reasons and more, this rule should never be enacted.”
Rice added that by eliminating the long-standing “effects test” under the ECOA, this rule “would eliminate one of the most powerful tools for uncovering and remedying systemic bias in lending.”
“This reckless proposal would encourage discriminatory practices, undermine civil rights enforcement, and roll back generations of progress toward economic justice, while threatening the health of the economy,” he said.
The agency had not responded HousingWires Request for comment on NFHA opposition when this story was published.
A directive from April 2025
The proposal builds on an April 2025 order from the Trump Administration directing federal agencies to stop using the legal theory known as “disparate impact liability” when enforcing civil rights laws.
According to the order, requiring companies to avoid discriminatory results in practice can encourage favoritism. “Disparate impact liability has prevented companies from making hiring and other employment decisions based on merit and ability, their needs, or the needs of their clients due to the specter that such a process could lead to disparate outcomes and, therefore, disparate impact lawsuits,” the order reads.
The CFPB is seeking public comments on the proposal by December 15.
