Trump Allies Demand Rollback of Biden’s DEI Mortgage Mandates

Gene Hamilton, who heads the group, didn’t mince words about the bureau’s requirements. “The federal government has no business forcing Americans to disclose their race or sex as a condition of applying for a mortgage,” he argued this week, framing the rules as relics of what critics now deride as “DEI” ambitions — shorthand for diversity, equity, and inclusion policies. They contend that mandating the collection of such personal data does more harm than good, potentially serving up fresh opportunities for discrimination rather than stamping it out. “The disclosure of this information leaves applicants vulnerable to race- and sex-based discrimination by government and private actors in violation of federal civil rights law and the Constitution,” one representative insisted.

It’s hardly a niche fight. Across the country, debates over how — or whether — to factor background into official decisions touch practically every corner of public life. In banking, as elsewhere, the pendulum is swinging fast: after years of Biden administration efforts to bolster fair lending through aggressive DEI enforcement, the tide has shifted. Supporters of the old rules claim that collecting race and gender data is the only way to make sense of persistent disparities in housing access. When banks report who gets approved and who doesn’t, watchdogs can sniff out disparities hidden in otherwise dry numbers. Get rid of these rules, civil rights advocates warn, and the patterns could slip back into the shadows, unseen and unfixed.

But for opponents, including backers of the current direction in Washington, the case for ending the old reporting rules sounds straightforward: judge applicants on their merits, not on details like the color of their skin or the letter on their birth certificate. They argue that by calling attention to demographic markers, regulators are inviting lenders to act on stereotypes — even if no one intends it. “These efforts could pressure lenders to sort borrowers by immutable characteristics and invite discrimination under the guise of ‘equity,’” reads a recent statement circulated among conservative policymakers.

The rethinking doesn’t stop at race and sex. Not long ago, federal officials rescinded guidance warning lenders against making loans harder to get for immigrants or non-citizens. The previous administration had pressed banks to avoid using citizenship status as a convenient excuse to deny loans — a concern that will ring familiar for immigrants who find credit channels tighter than ever. Critics now say that guidance painted with too broad a brush. In response, Lori Sommerfield, now a partner at a major law firm, suggests this reversal highlights two themes: a firmer approach to immigration, and a sharp rollback of certain fair lending enforcements. Meanwhile, Harmeet Dhillon, who serves as assistant attorney general in the DOJ’s Civil Rights Division, calls the former rules “ideologically-driven,” arguing the new playbook puts the laws first, interpretations second.

On the other hand, many banks and mortgage companies have long asked for clearer, more straightforward rules. The Equal Credit Opportunity Act — or ECOA — makes discrimination based on race, sex, or national origin illegal. At the same time, it gives lenders leeway to check someone’s citizenship or immigration status as part of a routine background check. Russell Vought, acting head of the CFPB, described the policy shift this way: “We are correcting the last administration’s attempt to ignore these well-accepted and common-sense principles of our nation’s fair lending laws.” It’s a neat summary, though the implications are anything but.

Of course, for Americans on the ground — potential buyers, aspiring homeowners — these administrative knife-fights aren’t just theoretical. When lenders ask for a Social Security number or proof of permanent residency, lawyers point out, that’s perfectly legal according to federal statute. But in practice, it can close doors, especially for those straddling the line between citizen and immigrant. “That may be all part of the same thrust to just make it unpalatable and unaffordable, and in other ways just difficult to stay,” attorney Kris Kully observed, noting that it doesn’t take much to turn a credit application into a maze with no exit for certain groups.

Beneath the partisan crossfire, at heart these questions boil down to something subtler: how much do we trust our institutions — and whom should those rules serve? Should regulators track demographic data, shining a light on who struggles and who succeeds, or does that practice itself risk reinforcing difference? Is a meritocratic system the fairest route, or does it conceal disparities that never quite disappear on their own? And in the midst of it all, the CFPB finds itself both embattled and indispensable, with critics seeking to strip it of power even as its leaders lobby Congress for more resources to keep pace with the courts.

Some problems in American life, it turns out, are never entirely solved. In the world of home finance, as in so many other places, the rules are as much about the values they signal and the histories they remember as about the numbers they’re meant to report. Whether you’re a policy wonk or just hoping the paperwork on your first home goes through without a hitch, the path forward is tangled — and no matter what side of the debate you’re on, the stakes are real.