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On July 13, the OCC, FDIC, and NCUA issued interagency guidance addressing lending to individuals who are not legally authorized to work in the United States. Issued pursuant to Executive Order 14406, the guidance reminds supervised financial institutions of existing credit risk management obligations and advises them to consider how employment authorization may affect a borrower’s ability to repay.
The agencies explain that lending to borrowers without work authorization may present elevated credit risk because their ability to generate income, maintain employment, and remain financially stable may be subject to greater uncertainty. Institutions should identify, measure, monitor, and control these risks through safe and sound underwriting practices. Specifically, the guidance addresses:
- Repayment sources. Projected repayment capacity should account for potential interruptions in employment or income caused by termination or suspension of employment, an inability to obtain lawful reemployment, or removal from the United States.
- Collateral recovery. Additional challenges may arise when contacting borrowers or locating and repossessing unaffixed collateral, including automobiles, recreational vehicles, and boats.
- Documentation and verification. Relevant considerations include whether employment income is current, verifiable, stable, and likely to continue. Supporting documentation may include paystubs, W-2s, tax returns, employer verifications, bank statements, or evidence of continuing work authorization. Loans exhibiting signs of credit weakness may also warrant consideration for classification and allowance-for-credit-loss purposes.
- Portfolio concentrations. Significant exposure to particular geographic markets, employers, or industries affected by immigration enforcement, employment verification practices, labor availability, or workforce disruptions could produce correlated credit deterioration across affected portfolio segments.
The guidance also advises financial institutions to review the CFPB’s June 8, 2026 Statement on Ability To Repay and Immigration Status. The statement discusses creditors’ obligations under the Truth in Lending Act and Regulation Z and explains that the Equal Credit Opportunity Act and Regulation B permit consideration of an applicant’s immigration status and information necessary to evaluate the creditor’s rights and remedies regarding repayment.
Putting It Into Practice: The guidance applies existing underwriting and risk-management principles to lending involving borrowers without work authorization. Supervised financial institutions should confirm that their practices comply with the Truth in Lending Act, Regulation Z, the Equal Credit Opportunity Act, and Regulation B, and monitor further supervisory developments.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
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