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Bank regulators remind lenders to manage credit risk for non-work-authorized borrowers
The OCC, FDIC and NCUA said lending to borrowers without U.S. work authorization may carry elevated credit risk due to uncertainty around income and employment stability.
The Office of the Comptroller of the Currency, the Federal Deposit Insurance Corp. and the National Credit Union Administration issued guidance urging banks and credit unions to manage credit risk when underwriting borrowers who are not authorized to work in the United States, HousingWire reports. The regulators said lending to individuals without U.S. work authorization may present elevated credit risk because a borrower’s ability to generate income, maintain employment and remain financially stable can be subject to greater uncertainty, and they tied the guidance to steps set in motion by President Donald Trump’s May 19 executive order.
The agencies said the guidance does not prohibit supervised financial institutions from making loans based on immigration status. Instead, it directs lenders to evaluate repayment risk using existing underwriting and risk management practices, including safe and sound underwriting that assesses a borrower’s willingness and capacity to repay according to the credit terms.
The statement also said institutions should continue complying with applicable consumer protection laws during borrower evaluations and pointed to a June 2026 Consumer Financial Protection Bureau statement on ability-to-repay requirements and immigration status. HousingWire reports the regulators framed their guidance as a reminder of existing obligations rather than a change that restricts lending.