FHA updates policy to affirm that DACA recipients are eligible for loans

The Federal Housing Administration shortly before Wednesday’s inauguration issued an informational bulletin that gives Deferred Action for Childhood Arrivals recipients with U.S. work permits access to loans it insures.

The new Department of Housing and Urban Development bulletin addresses a portion of the FHA handbook, which states that “non-U.S. citizens without lawful residency in the United States are not eligible for FHA-insured mortgages.”

Previously, Len Wolfson, assistant secretary of the Department of Housing and Urban Development under the Trump administration, said in 2019 the “non-citizens” language in the FHA’s handbook made DACA recipients ineligible for FHA loans.

That language was first added back in 2003 under the Bush administration, according to the Department of Housing and Urban Development. DACA became policy under the Obama administration in 2012.

HUD said this week’s change was made because “the term ‘lawful residency’ predates DACA and thus did not anticipate a situation in which a borrower might not have entered the country legally, but nevertheless be considered lawfully present.”

DACA allows some individuals who were brought to the U.S. without legal authorization as children to defer deportation in renewable two-year increments and become eligible for work permits so long as they don’t have felonies or serious misdemeanors on their records.

The Trump administration attempted to terminate DACA, but the Supreme Court ruled against the move 5-4 in June of last year, finding that it was in violation of the Administrative Procedure Act, among other things.

President Biden had said restoring DACA as an active program would be one of his early action items, and some have speculated that it could lead to a change in FHA policy. HUD may have made the change, dated Jan. 19, out of courtesy for the Biden transition team.