While it appears that the Federal Housing Administration may not be backing mortgages for Deferred Action for Childhood Arrivals recipients, Fannie Mae declared recently that it supports (and will continue to support) mortgages for DACA recipients, also called Dreamers.
In recent weeks, HousingWire has been investigating whether the federal government is backing mortgages for Dreamers. In the wake of HousingWire’s original reporting, a number of lenders said they’ve been told directly by the Department of Housing and Urban Development that Dreamers are no longer eligible for FHA mortgages.
To that end, HousingWire subsequently investigated and found 12 different lender bulletins or guidelines that each declared that that Dreamers are ineligible for FHA financing.
And while the FHA appears to be turning its back on Dreamers, Fannie Mae announced late last week that its policies surrounding DACA borrowers and other non-citizens has not changed, adding that it will back mortgages for Dreamers, as long as certain lending criteria are met.
“We have a longstanding policy on eligibility for non-U.S. citizen borrowers. Fannie Mae purchases and securitizes mortgages to non-citizens who are lawful permanent or non-permanent residents of the United States under the same terms available to U.S. citizens,” the government-sponsored enterprise said in a lender bulletin posted on Friday.
Fannie Mae said that it is not changing its existing policies. Rather, the purpose of issuing the bulletin was to provide “additional guidance to help lenders determine eligibility for non-U.S. citizen borrowers” in response to customer feedback on the issue.
According to Fannie Mae, a borrower is “legally present” in the U.S. if that borrower has a Social Security Number or Individual Taxpayer Identification Number; and has current, verified status, which may be documented by a valid employment authorization document (Dreamers would qualify under with category with C33 status), or other documentation showing immigration status is current (a Green Card, work visa, etc.).
If a borrower meets those criteria, they are categorized as “legally present.” And if that’s the case, the borrower must meet the typical Fannie Mae income requirements, including:
- Documentation of income continuity is not required for most employment-related income types (e.g., base, bonus, overtime, commission).
- If a borrower is reliant on income for which documentation of continuity is required, the mere fact that a borrower has current, verified status does not impact the continuity of income analysis. For example, if a borrower can provide documentation of 3-year income continuity when required, the fact that their status is renewed only every 2 years is not a factor — the borrower is legally present and has met the continuity of income requirements.
If those criteria are met, the borrower’s loan is eligible to be purchased by Fannie Mae.
To be more specific on the matter, Fannie Mae provided four examples of borrower scenarios under which a borrower would or would not qualify for a Fannie Mae mortgage.
One of those scenarios specifically deals with DACA borrowers.
According to the sample scenario laid out by Fannie Mae, if a borrower has “current, unexpired” DACA status and meets the following criteria: has an Individual Tax Identification Number; is a salaried borrower with acceptable employment history, has nontraditional credit acceptable per the Selling Guide; meets all other Selling Guide requirements, will have a manually underwritten loan; and has an Employment Authorization with C33 status; that borrower is eligible for a Fannie Mae loan.
To repeat, if those criteria are met, Fannie Mae considers that Dreamer’s mortgage eligible to be purchased.
Fannie Mae notes that lenders do “retain discretion as individual borrower situations differ.” Specifically, Fannie Mae said that lenders “can continue to decide what type of documentation is appropriate and what can be retained as part of the loan file to show that a borrower is legally present.”
Those sentiments echo what the GSE told HousingWire earlier this month.
Beyond that, Fannie Mae also states that it will support lenders if the borrower’s status changes.
“For loans that meet our documentation and eligibility requirements, we will not seek a loan repurchase solely based on a change in the borrower’s immigration status after closing,” the GSE said.
But Fannie Mae cautions that as with all of its policies, “subsequent changes to the law and its application may cause us to reevaluate our policy on this matter prospectively.”