Issue link: http://dsnews.uberflip.com/i/1109134
12 DACA BORROWERS: FHA ELIGIBLE AGAIN? By Tim Rood e debate about Deferred Action for Childhood Arrival (DACA) program borrower eligibility for Federal Housing Administration (FHA) loans has heated up following reports that FHA is not, as previously reported, denying mortgages to DACA recipients. In a recent letter from the U.S. Department of Housing and Urban Development (HUD) to Senator Robert Menendez, HUD asserted that it has made no policy changes with respect to DACA recipients. HUD's letter was in response to concerns raised by Senators Menendez, Booker, and others, following news stories suggesting that HUD had made a change in policy, barring DACA recipients from getting FHA loans. HUD's letter restates the position FHA has taken over the last year: longstanding FHA policy prohibits financing to individuals without legal residency status, and therefore there has been no policy change. e question FHA did not answer: are DACA recipients eligible borrowers? at is, do they have a lawful residence in the United States? While the underlying policy may not have changed, FHA's answer evidently has. In the early years of the DACA program, FHA's enforcement stance was that it was up to the lender to determine whether DACA represents a legal residency status. However, early last summer, they appear to have made an internal determination, based on language from U.S. Citizenship and Immigration Services (USCIS), that DACA does not provide legal residency. Important to note: e USCIS language does lend itself to other interpretations. While USCIS consistently notes that DACA is not a legal residency status, and does not provide a path to such status, they also state that DACA recipients are "legally present." "Deferred action under DACA does not confer legal status upon an individual and may be terminated at any time, with or without a Notice of Intent to Terminate." (February 2018), the USCIS says. "[...A]lthough deferred action does not confer a lawful immigration status...you are considered to be lawfully present in the United States during that time." (June 2016) Is legally present the same as lawfully resident? FHA evidently thinks not, and on that basis began advising lenders that DACA recipients are ineligible, and enforcing that interpretation in loan reviews, requesting indemnification on loans where the borrower's EAD card shows "C33" (indicating a DACA recipient). Lenders who make FHA loans to DACA borrowers should be prepared to make a strong legal case that FHA's interpretation is wrong and that DACA does provide a lawful residence. Tim Rood is the Chairman of e Collingwood Group, which he co-founded in 2009. Rood was co-founder and managing director of the firm's predecessor company, Capital Financial Solutions. Rood has over two decades of mortgage industry and entrepreneurial experience. He advises organizations to optimize the business opportunities and to mitigate and manage the risks in and around Washington, D.C. Rood is a sought after and a regular contributor to various national media outlets including CNBC, Bloomberg Television, FOX Business News, Washington Post, New York Times, Wall Street Journal, and the American Banker.