this Consumer Financial Protection Bureau The CFPB has broad authority under the Equal Credit Opportunity Act (ECOA) to prohibit discrimination against credit applicants and to deter potential credit applicants.
That bolsters the bureau’s enforcement authority as it launches a war against redlining, including against the Chicago-based case Dongjia Financeaccording to court documents reviewed house line.
In the summer of 2020, the CFPB filed suit against Townstone, alleging that it “violated ECOA by filing few applications for properties located in majority-African American neighborhoods in the Chicago-Naperville-Elgin Metropolitan Statistical Area (Chicago)” B of the “MSA”), there were very few African American applicants throughout the Chicago MSA. “
The CFPB claimed that this constituted discrimination. In October of that year, Townstone filed a motion to dismiss the case. In February 2023, a federal judge in Illinois ruled in Townstone’s favor, but the CFPB vowed to appeal. The Bureau seeks review of the decision United States Court of Appeals for the Seventh Circuit.
After more than a year of presentations and oral arguments, a three-judge panel of the appeals court ruled in favor of the CFPB on Thursday.
“The district court held that ECOA does not authorize liability for conduct that impedes potential applicants,” the ruling said. “For the reasons set forth in the opinion below, we dissent.”
In a statement provided to house lineSteve Simpson Pacific Legal Foundation Those representing Townstone in the case expressed disappointment with the decision but said the organization will continue to find a way forward.
“We are disappointed with the court’s ruling, which does not address many of our statutory arguments,” Simpson said in an email. “Regardless of the statutory issues with Regulation B, the CFPB’s lawsuit against Townstone is a flagrant violation of the First Amendment. We are considering next steps, but Townstone’s defense of the CFPB’s regulatory overreach is far from over.
The panel went on to say that ECOA gave sufficient powers Fed – Later, after the passage of the Dodd-Frank Wall Street Reform and Consumer Protection Act, the CFPB – enforced ECOA in this manner.
“An overall analysis of the ECOA text clearly shows that the text not only prohibits blatant discrimination against credit applicants but also discourages potential credit applicants,” the decision reads. “Congress gave the Commission (and later the Bureau) the authority to promulgate regulations ‘necessary or appropriate to carry out the purposes of this title’ or ‘to prevent circumvention or circumvention.'”
The panel went on to say that Congress’ intent in passing ECOA was to allow authorized agencies to broadly enforce the act.
“Congress stated that ECOA must be interpreted broadly to achieve its purpose of ending discrimination in credit applications. Furthermore, other provisions of ECOA strongly confirm that blocking credit applications constitutes a violation of the statute,” the decision said.
HousingWire reached out to representatives from the CFPB but did not immediately receive a response.
