U.S. bank regulators warn lending to borrowers without work authorization may pose elevated credit risk

According to CNBC, the Trump administration on Monday issued guidance from the Office of the Comptroller of the Currency, the Federal Deposit Insurance Corporation and the National Credit Union Administration saying people who are not authorized to work in the U.S. may present an “elevated credit risk” due to uncertainty around their ability to earn income and remain financially stable. The guidance did not appear to create new rules, but reminded banks to manage lending risks, including evaluating a borrower’s willingness and capacity to repay. Comptroller of the Currency Jonathan Gould said banks already have an obligation to know their customer. The guidance follows a May executive order from President Donald Trump directing regulators to crack down on unauthorized immigrants’ use of the financial system, including attention to credit risks tied to mortgages, auto loans, credit cards and other consumer credit. The Urban Institute estimated 5,000 to 6,000 mortgages were made in 2023 using Individual Tax Identification Numbers, compared with about 4.6 million total mortgage originations that year, according to the National Community Reinvestment Coalition.