- Key Insight: Truist Financial is being accused of discriminating on the basis of immigration status, two years after its subsidiary denied a loan to a Deferred Action for Childhood Arrivals program recipient.
- What's at Stake: According to the plaintiff's lawyer, many banks and credit unions follow the same practices as Truist, which he says leaves them vulnerable to similar lawsuits.
- Expert Quote: "We have brought this type of lawsuit against banks and credit unions across the country, so it seems to be a similar pattern." — Luis Lozada, staff attorney at the Mexican American Legal Defense and Educational Fund
The case involves Oscar Guillén Arauz, a Honduras-born man who has lived in the United States since he was 2. In 2024, Guillén Arauz applied for a loan from Sheffield Financial, a lender owned by
That request was denied. According to the
That denial, Guillén Arauz's lawyers say, was illegal. The Mexican American Legal Defense and Educational Fund, or MALDEF, the nonprofit representing Guillén Arauz, argues that denying a loan based on the applicant's immigration status violates a federal civil rights law dating back to the 1860s.
"The statute says that you can't deny or discriminate against someone in the formation of a contract," Luis Lozada, the attorney handling the case, told American Banker. Guillén Arauz, he said, was "discriminated against based on his alienage, or specifically his lack of U.S. citizenship."
In Lozada's experience, this kind of policy is far from a rarity.
"You'd be surprised — it's more common than you'd think," Lozada said. "We have brought this type of lawsuit against banks and credit unions across the country, so it seems to be a similar pattern practiced by a lot of banks and credit unions."
The lawsuit is the latest example of how banks are being
Since 2017, Guillén Arauz has been a recipient of the Deferred Action for Childhood Arrivals program, which temporarily protects certain immigrants from deportation and makes them eligible to work in the U.S. Thanks to the program, Guillén Arauz has both a Social Security number and employment authorization.
But in recent years, DACA has become a political football. President Obama enacted it in 2012, President Trump fought to
So it is far from clear what rights DACA recipients like Guillén Arauz can currently rely on. But in the view of his lawyers, the politics of the moment are irrelevant — the law is the law.
"Whether or not the current presidential administration invites discrimination against immigrants, businesses of all kinds need to understand that such discrimination is likely unlawful under longstanding and continuing legal constraints," Thomas Saenz, MALDEF's president and general counsel, said in a
Lozada, who has handled many similar lawsuits, said banks and credit unions typically don't advertise their policies regarding U.S. citizenship. Prospective customers who are not U.S. citizens, he said, are usually deep into the application process before they learn their immigration status is disqualifying.
Lenders "know if they have something written on their website or FAQs, they might be subject to a lawsuit because it's blatant, it's facially discriminatory," Lozada said. "My experience is that someone applies for a loan … and that's when they are told verbally or through email that, 'Oh, we only accept U.S. citizens or permanent residents.'"
Guillén Arauz filed his lawsuit on June 18. His lawyers are now waiting for
"Our view is that the law is on our side," Lozada said. "We still believe that we'll be successful, because the statute is still on the books."
