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Th e M Rep o RT | 59 O r i g i nat i O n s e r v i c i n g a na ly t i c s s e c O n da r y m a r k e t SECONDARY MARKET Department HUd secretary castro and cFPB address Housing choice voucher Program The fed initiative was enacted to discourage lenders from potentially violating fair lending laws. t he Consumer Finan- cial Protection Bureau (CFPB) recently issued a bulletin to help mortgage lenders evade illegal discrimination against applicants that include vouchers from the Section 8 Housing Choice Voucher (HCV) Homeownership Program in their income when applying for a mortgage loan. This type of discrimination may violate federal fair lending protections. The bulletin offers lend- ers advice for observing their fair lending risks, including the importance of clear underwriting policies, training for underwriters and loan originators, and careful monitoring for compliance with underwriting policies. "Everyone deserves the op- portunity to qualify for a mort- gage that they can afford, based on their stable income," CFPB Director Richard Cordray said. "Consumers should not be put at a disadvantage just because they receive public assistance." According to the bulletin, the Section 8 HCV Homeownership Program was enacted in an effort to assist low-income families in purchasing their first home. HUD funds the programs and local pub- lic housing authorities administers the vouchers to those they deem in need. Public housing authorities provide eligible applicants with a monthly housing stipend that is intended to ease the burden of housing payments. It has been brought to the CFPB's attention that mortgage lenders have refused income that comes from this program when considering applications for loans and underwriting processes, as noted in the bulletin. Some institutions are only accepting the vouchers for certain mortgage loan products or delivery channels. The Equal Credit Opportunity Act (ECOA) does not allow credi- tors to discriminate against an ap- plicant because some or all of the applicant's income is from a public assistance program, such as the Section 8 HCV Homeownership Program. If lenders exclude or re- fuse these vouchers as an income source categorically, or accept the vouchers for specific types of loans, they may violate ECOA and its implementing regulation, Regulation B. HUD Secretary Julián Castro ad- dressed the importance of the HCV Homeownership program during a recent national press call to address House Republican cuts to invest- ments in urban communities. In February, President Obama developed a budget proposal that would benefit Americans who are in need of housing assistance. A Republican-controlled house responded to the president's pro- posal with "a budget that supports inaction and disinvestment when it comes to the needs of our nation's most vulnerable citizens," Castro said on the call. When announcing the call, HUD referenced a Harvard University study that found that mobility and place-based policies create pathways out of poverty. HUD initiatives such as Choice Neighborhoods and HCV are two such place-based policies. "Without these vouchers, HUD will not be able to continue as- sistance to many low income households or provide new vouch- ers for families, veterans, and tribal families experiencing homeless- ness; victims of domestic or dating violence; youth aging out of foster care; and families with children in the foster care system for whom voucher assistance could facilitate reunification," Castro said. "Without these vouchers, HUD will not be able to continue assistance to many low income households." —Secretary Julián Castro, HUD "Consumers should not be put at a disadvantage just because they receive public assistance." —Director Richard Cordray, CFPB