Federal regulators remind lenders that borrowers without work authorization may pose elevated credit risk
Three federal banking regulators moved Monday to push immigration enforcement deeper into the mortgage underwriting process, directing lenders to reassess the credit risk posed by borrowers who lack United States work authorization.
The Office of the Comptroller of the Currency (OCC), the Federal Deposit Insurance Corporation (FDIC), and the National Credit Union Administration (NCUA) jointly warned financial institutions that lending to borrowers not legally authorized to work in the US presents heightened credit risk, urging banks and credit unions to strengthen underwriting and risk management practices.
The guidance was issued just ahead of a July 18 regulatory deadline set by Executive Order 14406, "Restoring Integrity to America's Financial System," signed by President Donald Trump in May 2026 — the administration's most direct move yet to embed immigration enforcement in the credit underwriting process.
"When a borrower's income is derived from employment that is not legally authorized, the source of repayment may be less reliable and may present increased credit risk," the OCC, FDIC, and NCUA said in the joint statement.
No new lending rules were imposed. The guidance does not impose new requirements or outright prohibit banks and credit unions from lending to such borrowers. Instead, it reminds them of their existing obligations.
What this means for ITIN lending
The sharpest pressure falls on the small but closely watched market for Individual Taxpayer Identification Number (ITIN) loans — non-qualified mortgage products issued to borrowers without a Social Security number.
Most ITIN holders are unauthorized immigrants, according to the Urban Institute, which estimated approximately 5,000 to 6,000 ITIN mortgages were originated in 2023, against a backdrop of roughly 4.6 million total originations that year, per the National Community Reinvestment Coalition.
Monday's guidance explicitly incorporates the Consumer Financial Protection Bureau's (CFPB) June 8 Statement on Ability to Repay and Immigration Status, which flagged ITIN use as a potential indicator of unlawful presence.
The CFPB stated that a creditor's awareness of a consumer's immigration status may affect reasonable expectations about whether income from US-based employment will remain available for repayment.
The development accelerates a broader tightening of immigrant mortgage access — a trend that began when FHA-insured mortgages were closed off to H-1B visa holders and other non-permanent residents in May 2025.
Mortgage broker associations have already challenged federal moves to restrict non-permanent resident borrower access to government-backed and conventional loan programs, warning of market contraction and increased lender concentration risk.
Legal experts also caution that blanket denials based on ITIN use alone could create fair lending exposure under the Equal Credit Opportunity Act, placing originators in a difficult position with obligations pulling in opposite directions.
A compliance question, not a new rule
Attorneys at Troutman Pepper Locke noted at the time of the executive order that while regulators are treating immigration status and work authorization as relevant risk factors, the framework "appears to stop short of requiring financial institutions to verify every customer's immigration status," describing the approach as risk-based.
For brokers and lenders monitoring how federal banking policy may reshape credit risk standards across all loan programs, the next compliance signpost arrives by mid-August, when Treasury must issue proposed amendments to Bank Secrecy Act customer due diligence rules.
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