FHA Mortgages

HUD Revises FHA Mortgage Citizenship Guidelines

hud-revises-fha-mortgage-citizenship-guidelines

The Department of Housing and Urban Development issued a press release announcing major changes in the way participating FHA lenders handle home loan applications that are completed by individuals who are in the United States but are not US citizens.

The amended policy allows a lender to approve FHA home loans for individuals in the United States under the Deferred Action for Childhood Arrivals (DACA) program.

In 2012, the Department of Homeland Security issued a guideline for those who entered the United States as minors and who met “certain additional guidelines” – those applicants are entitled to “postponed deportation actions” for two years United States apply for years, subject to renewal.

This makes it technically possible for those under the DACA to be legally entitled to work in the United States during the “Period of Deferred Action”. Thanks to the measures taken by HUD in 2021, this is no longer just a matter of form.

The FHA loan guidelines in HUD 4000.1 contain rules for FHA loan approval for “non-resident permanent aliens” and other non-US citizens in the country.

The rules changed by HUD now include those in the country under DACA to consider loan approval under the FHA single family home loan program.

Under the new guidelines, anyone in the United States can apply for an FHA home loan under the auspices of DACA and be recognized as a legal US resident and worker with possible loan approval if they meet the usual applicable FHA and HUD requirements.

Refugees or asylum seekers in the country do not need to provide the following documents when applying for an FHA mortgage:

  • Work Permit Document (USCIS Form I-766) OR;
  • USCIS Form I-94 indicating refugee or asylum status OR;
  • USCIS Form I-797 Notice regarding the approval of a USCIS Form I-589, asylum application, or withholding deportation that establishes refugee or asylum status.

In certain cases, an employment permit document or proof of H-1B status may expire within a year at the time of the lender review.

If there is “a history of residency renewals,” the new rules say a participating lender can proceed on the assumption that another continuation is approved. “If there are no previous renewals, the mortgagee must use information from the employer or USCIS to determine the likelihood of renewal.”

All of the typical FHA loan approval rules apply to these mortgages (financial considerations). Homes bought with FHA mortgages must be primary residences and all required identification normally required to apply.

The FHA Loan Framework, HUD 4000.1, is due to be revised to include two basic types of categories of people eligible for an FHA mortgage – “permanent residents” and “non-permanent residents”.

The new rules should apply by July 26, 2021 at the latest; participating lenders can apply the new rules as soon as they are published if they so choose.

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