The Trump administration released guidance on Monday through three federal banking regulators urging financial institutions to carefully scrutinize lending decisions involving individuals lacking U.S. work authorization. The Office of the Comptroller of the Currency, Federal Deposit Insurance Corporation, and National Credit Union Administration characterized such borrowers as potentially presenting an “elevated credit risk” due to uncertainties surrounding income generation, employment stability, and financial sustainability.
The regulatory guidance does not establish new mandatory rules but instead reminds banks of their existing obligations to assess borrowers’ capacity and willingness to repay loans, as well as to maintain adequate knowledge of their customers. Comptroller Jonathan Gould emphasized during a media appearance that banks already carry a fundamental responsibility to understand their customer base.
Critics have expressed concern that the guidance may discourage banking activities among immigrants regardless of their work authorization status, elevate compliance expenses for financial institutions, and potentially redirect funds outside regulated banking channels where fraud risks may increase. Comprehensive data on lending patterns to undocumented immigrants remains limited, as banks are not obligated to collect citizenship information from customers. While mortgages typically require a Social Security number, some loans can be obtained using an Individual Tax Identification Number, with ITIN holders predominantly consisting of unauthorized immigrants. Data indicates that between 5,000 and 6,000 ITIN mortgages were originated in 2023, compared with approximately 4.6 million total mortgage originations that year.
The regulatory guidance represents an implementation of an executive order issued by President Trump in May directing federal regulators to heighten scrutiny of financial system access for unauthorized immigrants. The order specifically instructs financial institutions to consider credit risks associated with mortgages, auto loans, and credit cards extended to this population. Legal experts have noted that while the order clearly designates immigration status as a relevant risk consideration, it appears to emphasize a targeted approach rather than mandate universal immigration status verification across all customers.
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