Overview

• Creates Office of Fair Lending Testing within Consumer Financial Protection Bureau to investigate lending discrimination
• Strengthens Equal Credit Opportunity Act by adding new protected categories and criminal penalties
• Status: Introduced January 3, 2025, referred to House Financial Services Committee

Who does this affect?

• Families applying for mortgages, car loans, credit cards, or any credit
• LGBTQ+ borrowers (new explicit protections for sexual orientation/gender identity)
• People in certain ZIP Codes or census tracts (redlining now explicitly illegal)
• Organizations fighting lending discrimination (can now sue more easily)
• Teen impact score: 5/10 (indirect impact via family access to credit affecting housing stability and household economics; some direct impact for 18-19 year olds applying for student loans)

What This Bill Does

• Creates Office of Fair Lending Testing: 5-year director appointed by CFPB, conducts undercover testing using fake borrowers to catch discrimination, refers violations to Attorney General in writing
• Criminal penalties for violations: Individual acts carry up to $50,000 fine and 1 year prison; pattern/practice violations carry up to $100,000 per violation and 20 years prison
• Executive liability: Bank executives who cause pattern/practice violations can be fined 100% of compensation received during violations (including stock options) and imprisoned up to 5 years
• Bans discrimination based on ZIP Code or census tract (targets redlining practices)
• Expands 'sex' discrimination explicitly to include sexual orientation and gender identity
• Broadens legal standing: Creates 'aggrieved person' category including anyone who believes they will be injured by discriminatory practices (organizations can now sue)
• Requires mortgage lenders to collect expanded data: ZIP Code, census tract, income, race, color, religion, national origin, sex, marital status, sexual orientation, gender identity, age
• Mandates CFPB review loan applications and processes; can prohibit discriminatory forms and take enforcement action

Legislative Status

• Introduced January 3, 2025 by Rep. Green (D-TX)
• Referred to House Committee on Financial Services; awaits committee action

In short

• Creates government office that sends undercover 'testers' posing as borrowers to catch lenders discriminating based on race, location, or other factors
• First-time criminal penalties: lenders violating fair lending laws face fines and prison time, with harsher penalties for repeat violations
• Explicitly bans denying loans based on ZIP Code (redlining) and adds sexual orientation/gender identity protections
• Makes it easier for advocacy groups to sue discriminatory lenders by expanding who counts as injured party
• Requires mortgage companies to collect detailed borrower demographic data to track discrimination patterns

Why should I care?

Where your family lives affects whether they can get a mortgage or loan under current lending practices. This bill tackles 'redlining' where banks avoid certain neighborhoods based on demographics rather than creditworthiness. If your family applies for a mortgage, car loan, or credit card, these protections mean lenders can't legally reject them based on race, religion, ZIP Code, or LGBTQ+ status. The criminal penalties aim to make banks take fair lending seriously since civil fines alone haven't stopped discrimination. For 18-19 year olds applying for student loans or first credit cards, explicit sexual orientation and gender identity protections matter. The data collection helps researchers and regulators spot patterns showing which communities get shut out of credit access.