Immigration Status and Mortgage Eligibility: A Delicate Balance

The request for "naturalization papers" or a passport from a mortgage buyer, depending on their immigration status, can be a complex issue, raising concerns about anti-discrimination practices. While citizenship is not required for a mortgage, a lender can ask about permanent residency and immigration status. The Department of Housing and Urban Development updated its residency requirements for loans insured by the Federal Housing Administration, prioritizing federal resources to protect the financial interests of American citizens and eliminating eligibility for nonpermanent residents.

Key Takeaways:

• Lenders can ask about permanent residency and immigration status, but must not discriminate based on national origin, accent, or language.
• Citizenship is not required for a mortgage, but immigration status is a factor in mortgage eligibility.
• The Department of Housing and Urban Development updated its residency requirements for loans insured by the Federal Housing Administration, prioritizing federal resources to protect the financial interests of American citizens.
• The new HUD rules could lead to questions that unlawfully single out individuals based on their nation of origin, accent, or language.
• Asking for naturalization papers or a passport is consistent with verifying identity necessary to underwrite the mortgage.
• The underwriter's selective request raises anti-discrimination concerns if it was prompted by stereotypes regarding national origin, citizenship, or immigration status.
• Proving discrimination requires showing that one protected class was deliberately treated differently.
• If a lender or broker is suspecting unfair treatment, they can refer clients to a local fair housing center for expert review.

Statistics:

• In March, the Department of Housing and Urban Development updated its residency requirements for loans insured by the Federal Housing Administration.
• The new HUD rules eliminate eligibility for nonpermanent residents.
• 100% of lenders must comply with anti-discrimination laws and regulations, including the Fair Housing Act.

Sources:

• Stefanie Seldin (2016) "Evaluation of FHA's Platform to Support Its Duty to Serve Program" for the Office of Inspector General U.S. Department of Housing and Urban Development
• Stacey L. Tutt, senior staff attorney covering homeownership at the National Housing Law Project
• Andrew Lieb, who practices discrimination law in New York
• Anna DeSimone, who writes books about mortgages and fair lending