HUD Clarifies that DACA Recipients Are Not Eligible For Loans from the Federal Housing Administration

June 25, 2019 at 9:11 am Leave a comment

Good Morning folks. In a June 11th letter to Representative Peter Aguilar, HUD officially confirmed what had been speculated about for months: It was actively implementing a policy of denying FHA eligibility for FHA loans to DACA recipients.

 As I explained in this blog, confusion has been mounting for months over what exactly HUD’s policy is regarding DACA recipients. Remember, the Trump Administration has ended the program but has not formally revoked the immigration status of DACA eligible individuals. In 2012, the Obama Administration created the “Deferred Action for Childhood Arrivals” program. Under the program, persons born outside of the United State who entered the country illegally before the age of 16 are entitled to “deferred action” stemming from their immigration status provided they follow certain rules. The program allowed these individuals to obtain documentation which allowed them to, among other things, take out loans. In 2017, the Trump Administration put an end to the program.

 As it noted in the letter, HUD’s action is technically not a change in HUD’s lending policy. The critics say this is only partially true. This memo from the House Financial Services Committee summarizing a hearing on barriers to minority homeownership argues that since at least 2018, HUD “may have made an informal change to interpret its own existing regulations to consistently deny loans to DACA recipients where as previously, some lenders had been able to originate loans for DACA recipients.” In the meantime, both Fannie and Freddie have felt the need to publicly state that they will still purchase loans given to DACA recipients.  

This goes in to the “don’t shoot the messenger” category. Regardless of where you stand on the immigration debate, from a compliance standpoint it is prudent for you to understand what your policies and procedures are with regard to the immigration documentation for persons seeking loans. Given our current political environment, you may have less and less flexibility to make your own decisions regarding the propriety of some of these loans. The more information you have ahead of time, the more prepared you will be.

 

Entry filed under: Mortgage Lending, Political. Tags: , , , .

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Authored By:

Henry Meier, Esq., Senior Vice President, General Counsel, New York Credit Union Association.

The views Henry expresses are Henry’s alone and do not necessarily reflect the views of the Association. In addition, although Henry strives to give his readers useful and accurate information on a broad range of subjects, many of which involve legal disputes, his views are not a substitute for legal advise from retained counsel.

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