The Federal Housing Administration (FHA) and Fannie Mae are at odds over whether so-called “Dreamers” are eligible borrowers.
U.S. Sen. Bob Menendez (D-N.J.), the ranking member of the Senate Subcommittee on Housing, sent a letter to U.S. Secretary of Housing and Urban Development (HUD) Ben Carson regarding a recent Buzzfeed report suggesting the Trump administration has begun implementing an unofficial policy of denying FHA-insured mortgages to Deferred Action for Childhood Arrivals (DACA) recipients, also known as Dreamers.
“We are appalled that the Trump administration would exploit a federal government program to deny Dreamers an opportunity of owning their own home, a cornerstone of the American dream,” Menendez said in the letter, which was co-signed by Sens. Cory Booker (D-N.J.) and Catherine Cortez Masto (D-Nev.).
“As you know, Hispanics have been responsible for 59 percent of homeownership growth in the U.S. over the past five years, and are the only demographic to have consecutively increased their homeownership rates over the last three years. Moreover, immigrants who are not citizens have a homeownership rate of 39.3 percent.”
Media reports state that HUD has privately instructed mortgage lenders to reject FHA mortgage loan applications from DACA recipients on the basis that their DACA Employment Authorization Documents no longer are valid for proving work status, Menendez added.
“If these reports are accurate, this informal policy means that DACA recipients who would otherwise qualify for an FHA-insured mortgage loan, are now being unjustly rejected,” he said.
Meanwhile, Fannie Mae has announced it would continue to provide mortgages to DACA recipients if the borrower is legally present and meets income requirements. The agency appears to believe that DACA verification meets the “legally present” standard required for loans to be sold to Fannie.
“We have a longstanding policy on eligibility for non-U.S. citizen borrowers,” the government-sponsored enterprise (GSE) said in a lender bulletin. “Fannie Mae purchases and securitizes mortgages to non-citizens who are lawful permanent or non-permanent residents of the United States under the same terms available to U.S. citizens.”
Len Wolfson, HUD’s assistant secretary for Congressional and Intergovernmental relations, responded to the media allegations with his own letter stating the agency has not implemented any formal or informal policy changes regarding DACA recipients and FHA eligibility.
“HUD has longstanding policy regarding eligibility for non-U.S. citizens without lawful residency,” Wolfson wrote. “Those policies have not been altered.”
Wolfson noted that FHA has had a published policy since at least 2003 that non-U.S. citizens without lawful residency are ineligible and required lenders to verify the residency status of applicants from documentation provided by the prospective borrower.
That policy then was continued and incorporated into the Single Family Housing Policy Handbook under the Obama administration, the HUD official added. That policy appears to question whether DACA status provides lawful residency, as defined by HUD.