The Office of the Comptroller of the Currency, the Federal Deposit Insurance Corporation, and the National Credit Union Administration issued guidance this week to financial institutions related to borrowers not authorized to live in the United States.
Specifically, the guidance pertains to financial institutions existing obligations with respect to credit risk management, particularly as it relates to borrowers who are not legally authorized to work in the country. The guidance states that lending to individuals who are not legally authorized to work in the United States may present elevated credit risk because a borrower’s ability to generate income, maintain employment, and remain financially stable may be subject to greater uncertainty.
The guidance advises financial institutions to identify, measure, monitor, and control these risks through safe and sound underwriting practices that assess a borrower’s willingness and capacity to repay according to the terms of the credit obligation.
The guidance also advises financial institutions to consider the Consumer Financial Protection Bureau’s Statement on Ability To Repay and Immigration Status.” It reminds creditors of their obligations under the Truth in Lending Act.
The guidance was issued in accordance with Executive Order 14406, “Restoring Integrity to America’s Financial System.” This order addresses risks to the financial system posed by the extension of credit or financial services to the inadmissible and removable population.