On January 20, 2021, the U.S. Department of Housing and Urban Development (HUD) released guidance clarifying its definition of the term "lawful residency." Under the updated guidance, HUD makes clear that individuals classified under the Deferred Action for Childhood Arrivals (DACA) program with the U.S. Citizenship and Immigration Service (USCIS) and are legally permitted to work in the U.S. are eligible to apply for mortgages by the Federal Housing Authority (FHA). The announcement came via the publication of FHA Info #21-04 and is effective as of January 19, 2021. HUD indicated that the FHA Single Family Housing Handbook will be amended to reflect this new guidance in the next update to the handbook.
For all borrowers applying for an FHA-insured mortgage, including DACA residents, other FHA requirements remain in effect, including:
- The property will be the borrower's principal residence;
- The borrower has a valid Social Security number, except for those meeting limited exemptions;
- The borrower is eligible to work in the U.S., as evidenced by the Employment Authorization Document issued by the USCIS; and
- The borrower satisfies the same requirements, terms, and conditions of those for U.S. citizens.
Lenders that previously read HUD's use of the phrase "lawful residency" to not include DACA residents should immediately update their policies to comply with HUD's clarified position. HUD's policy priorities under the Biden administration are still developing; however, we anticipate that this newly updated guidance will be enforced by the new administration.
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