Federal banking regulators released guidance on Monday directed at how financial institutions should assess lending risks to individuals lacking U.S. work authorization. The guidance came from three agencies: the Office of the Comptroller of the Currency, Federal Deposit Insurance Corporation, and National Credit Union Administration. The regulators characterized unauthorized workers as potentially posing “elevated credit risk” due to uncertainties around income generation, employment stability, and financial capacity.
The guidance does not establish new binding rules but instead reminds banks of existing obligations to evaluate borrowers’ ability and willingness to repay debt. Jonathan Gould, Comptroller of the Currency, emphasized that banks already have a requirement to know their customers. The agencies stopped short of requiring verification of immigration status for all borrowers.
Critics expressed concern that such federal guidance could discourage banking system use among immigrants broadly and increase compliance burdens for financial institutions. They also warned it might redirect money toward unregulated channels, potentially creating fraud and abuse risks. Data on lending patterns to undocumented immigrants remains limited since banks do not collect citizenship information as standard practice.
Mortgage lending provides some visibility into the issue, as most conventional mortgages require Social Security numbers. However, alternative mortgages utilizing Individual Tax Identification Numbers exist, with most ITIN holders being unauthorized immigrants. Approximately 5,000 to 6,000 ITIN mortgages were originated in 2023, representing a small portion of the roughly 4.6 million total mortgage originations that year.
The guidance follows a May executive order from President Trump directing regulators to address financial system access by unauthorized immigrants, specifically mentioning mortgages, auto loans, credit cards, and consumer credit products.
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