Ask an RU: How Do Citizenship and Residency Impact a Borrower’s Mortgage?

When working with borrowers, you must first determine if your borrower is eligible for a mortgage. Doing so may require extra research to identify whether your borrower is a legal U.S. resident, or if they were born outside of the U.S. If they are the latter, then there are factors that impact how a person’s residency will affect their potential for a mortgage.

That’s why we’re diving into borrower citizenship and residency! We will explore the different types of borrower citizenship, how residency impacts mortgage documentation and eligibility, and how Enact can help.

Understanding Borrower Citizenship Terminology:

Here are some definitions to help clarify borrower citizenship:

U.S. Person/Citizen:

A “U.S. person” is defined as a lawful permanent resident (either U.S. citizen or a non-U.S. citizen/legal immigrant with a legal U.S. status or a protected individual that has been granted asylum or refugee status).

Foreign National:

A “foreign national” includes everyone else, including foreign governments or entities not incorporated to do business in the U.S. By definition, a foreign national is any person (including an organization) who is not a national of a specific country.

• For example, in the United States and in its territories, a foreign national is neither a citizen of nor a national of the United States.

Non-Permanent Resident Aliens:

A borrower who is a non-permanent resident alien, including Deferred Action for Childhood Arrivals (DACA), may be eligible with evidence of the following documentation.

• A current, valid visa or a current (unexpired) Employment Authorization Document (EAD). This would be issued by the United States Citizenship and Immigration Services (USCIS).
• The documentation must substantiate that the borrower is eligible to work in the U.S. This must be maintained in the Origination File.

Note: The U.S. Citizenship and Immigration Services (USCIS) website within the Department of Homeland Security provides additional examples of documentation that establish both identity and employment authorization here.

Permanent Resident Aliens: 

A borrower who is a permanent resident alien may be eligible with evidence of the following documentation.

• A current, valid “green” card or Alien Registration Receipt Card (Form I-551). This would be issued by the USCIS as evidence of permanent residency; or
• If the borrower has not received a hard copy of the permanent green card at the time of loan origination, a valid and unexpired foreign passport with the following stamp is acceptable:

Processed for I-551. Temporary evidence of Lawful Admission for Permanent Residency. Valid until MM-DDYY. Employment Authorized. Click here for an example.

Can Foreign Nationals Obtain Mortgage Financing?

Documentation requirements when applying for a mortgage loan will largely depend on your residency—whether it is permanent or non-permanent. In either case, buying a home in the U.S. is typically a matter of providing the required immigration and visa documents and meeting the loan criteria.

Meeting eligibility requirements may be challenging for some foreign nationals with limited credit information. It may take some time to establish a solid employment and credit history in the U.S. Fortunately, some lenders do not require borrowers to have a credit score. They may elect to use a borrower’s international credit score to evaluate their credit history. Additionally, lenders may use non-traditional methods to assess the creditworthiness of applicants with a thin credit history or no credit score.

That may involve the lender reviewing:

• Payments for rent, utilities, and other recurring bills
• Bank account information, including recurring payroll deposits
• Employment verification and Property records

How Does Residency Impact a Mortgage?

The process of qualifying for a mortgage is similar to what U.S. citizens experience if you’re a permanent resident with a green card or a non-permanent resident with a work permit or valid work visa. That’s because a lawful resident of the U.S. is eligible for a mortgage on the same terms as a U.S. citizen, according to standards published by Fannie Mae and Freddie Mac—the government-sponsored enterprises that guarantee most mortgages originating in the U.S. However, those standards can cause it to be more challenging for foreign nationals who don’t reside in the U.S. to qualify for a mortgage.

What Enact Can do to Help:

Enact MI, as well as Fannie Mae and Freddie Mac require all borrowers to be lawfully present in the U.S.

Enact MI restricts both foreign nationals and non-permanent resident aliens with diplomatic immunity.

At Enact MI, we outline the documentation required to establish eligibility for permanent and non-permanent resident aliens that are lawfully present in the U.S. as follows:

Enact will insure loans to non-U.S. citizens who are non-permanent or permanent resident aliens under the same terms available to U.S. citizens provided:

• All borrowers have a valid Social Security Number or Individual Tax Identification Number (ITIN)
• At least one borrower on the loan must have a valid Social Security Number
• By itself, an ITIN is not evidence that the borrower is lawfully present in the United States. An ITIN is issued strictly for tax payment purposes.
• All borrowers whose income is being used to qualify for the loan have a two (2) year history of employment, income and credit that meets GSE standard guidelines

Want even more information? 

After discussing citizenship with your borrower, obtain documentation per the applicable guidelines. Feel free to reach out to Enact MI’s Regional Underwriting Team to discuss, if you have further questions. Be sure to also refer to the Freddie Mac and Fannie Mae guides for more information on their guidelines.

Enact’s Regional Underwriting Team is available to assist you Monday-Friday 8am to 8pm ET at 800-444-5664 option 2. Be sure to make the most of your MI experience. Please explore our many underwriting resources for more information. Because going the extra mile comes easy for us, we also offer a comprehensive suite of training resources to help boost your industry experience.

Source:  Donna Muratalla is a Regional Underwriter for Enact.

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