Posted on March 22, 2019

Dreamers Denied: Evidence Mounts FHA Is Not Backing DACA Mortgages

Ben Lane, HousingWire, March 21, 2019

Despite the Department of Housing and Urban Development stating recently that its policies have not changed in regards to the Federal Housing Administration backing mortgages for Deferred Action for Childhood Arrivals recipients, it appears that the opposite is actually the case.

Or at least that’s how the mortgage lending industry is reacting.

In the wake of HousingWire’s original reporting, numerous lenders reached out and said that they’ve been told directly by a HUD representative that DACA recipients, also called Dreamers, are no longer eligible for FHA mortgages.

Now, a new HousingWire investigation has uncovered lender bulletins or guidelines from a dozen different lenders each stating that Dreamers are not eligible for FHA financing.

In most cases, the lenders do not list a reason for why Dreamers are ineligible for FHA financing, but two state housing finance agencies do provide a reason {snip}.

The Connecticut Housing Finance Agency, for example, recently published a lender bulletin that states: “FHA now stipulates that Non-Permanent Resident Alien Guidelines require lawful residence for FHA loans. Although Deferred Action for Childhood Arrivals (DACA) immigrants are in the United States legally, under the new administration they are not considered to have lawful residency.”

According to the bulletin, as of one month ago, “DACA applicants will not be eligible for first or second mortgage loan financing approval in any CHFA mortgage loan product, conventional or government.”

A similar notice was posted on the website of the Idaho Housing and Finance Association. {snip}


Gateway Mortgage Group also provides a more detailed explanation on its policies surrounding DACA borrowers. {snip}


Other lenders are far simpler in their declaration that Dreamers are not eligible for FHA mortgages.

NewRez, which recently changed its name from New Penn Financial, lists “Borrowers with Deferred Action for Childhood (DACA) approval” under a category titled “Ineligible Borrowers” on its FHA lending guidelines for correspondent and wholesale lenders.


Other lenders have told HousingWire privately that they’ve been told by senior level HUD personnel that the FHA is not backing DACA mortgages.

The bottom line is that without clear and definitive information from HUD and the FHA about whether they’re backing DACA mortgages, lenders are taking matters into their own hands so they’re not left without a buyer for the mortgages they originate.

Without a buyer for the mortgage, they can’t originate another one. That’s how lenders make money. And investors aren’t going to buy a mortgage if they don’t think the FHA is backing it. That’s leading lenders to not originate FHA mortgages for Dreamers.


Add all of this together and one starts to see that it’s becoming increasingly more difficult for a Dreamer to get any kind of mortgage, let alone an FHA one. {snip}

[Editor’s Note: The original article contains statements from more than a dozen lenders concerning their DACA policies with links to original documents.]