[Ask an RU] Underwriting Mortgages for DACA Borrowers
Since the inception of the Deferred Action for Childhood Arrivals (DACA) program, there have been many questions around DACA borrowers and the types of considerations given to their files. While you may not need to underwrite these types of files often, there are a few key things to know about DACA borrowers and how the GSEs handle those files.
What Is DACA?
DACA is a United States immigration policy that allows some individuals with unlawful presence in the United States after being brought to the country as children to receive a renewable two-year period of deferred action from deportation and become eligible for a work permit in the U.S. While DACA does help these individuals become eligible for work permits, it does not provide a path to citizenship for recipients.
The U.S. Citizenship and Immigration Services (USCIS) began accepting applications for the program on August 15, 2012.
Things to Check for on DACA Borrower Files
As you work with DACA borrowers, there are a few key things to keep in mind.
Determine Work Eligibility Status
When underwriting files for DACA applicants, you will need to determine if an individual’s Employment Authorization Document (EAD) reflects that he/she is eligible to work. All you need to do is examine their EAD and look for “C33” under the “Category” designation.
Sample. Reference other codes here.
Determine If MI Partner Insures Loans for Non-U.S. Citizens
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 are lawfully present in the U.S. and supporting documentation must be maintained in the Origination File. Refer to the documentation requirements as referenced below.
- 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
If your borrower meets all these parameters, you will also need to provide the following documentation for non-permanent resident aliens (including DACA individuals):
- A current, valid visa or a current (unexpired) Employment Authorization Document (EAD) issued by the United States Citizenship and Immigration Services (USCIS)
- The documentation must substantiate the borrower is eligible to work in the U.S. and must be maintained in the Origination File.
Do note you can find more examples of documentation that establish both identity and employment authorization on the U.S. Citizenship and Immigration Services website within the Department of Homeland Security.
Understanding the GSEs’ Stance on Non-U.S. Citizen Borrowers
While the Federal Housing Administration may not be backing mortgages for Deferred Action for Childhood Arrivals recipients at this time, Fannie Mae declared in March 2019 that it supports (and will continue to support) mortgages for DACA recipients.
Fannie Mae (B2-2-02) does not specify the precise documentation the lender must obtain to verify that a non-U.S. citizen borrower is legally presacent in the United States. The lender must determine the non-U.S. citizen’s status based on the circumstances of the individual case using documentation it deems appropriate. By delivering the mortgage to Fannie Mae, the lender represents and warrants the non-U.S. citizen borrower is legally present in this country.
To assist lenders with clarity, Fannie Mae considers a borrower legally present in the U.S. if:
- He/she has a Social Security Number or Individual Taxpayer Identification Number; and
- He/she has a current, verified status, which may be documented by a valid EAD, or other documentation showing immigration status is current.
Fannie Mae created a helpful tool which provides several borrower scenarios to assist with your evaluation.
Freddie Mac (5103.2) provides the following guidance for Permanent and non-permanent residents:
- A non-U.S. citizen who is lawfully residing in the U.S. as a permanent or non-permanent resident alien is eligible for a Mortgage on the same terms as a U.S. citizen.
- A Mortgage to a non-U.S. citizen who has no lawful residency status in the United States is not eligible for sale to Freddie Mac
The Loan Product Advisor (LPA) Documentation Matrix states Freddie Mac does not specify the documentation required to establish lawful U.S. residency. You should consult your own counsel or other information sources to determine documentation that may be used to establish lawful residency.
As always, check with your investor to determine what their guideline requirements are.
Have additional questions on DACA borrowers? Feel free to reach out to your Enact Regional Underwriting at 800-444-5664, Option 2.
Marilyn Richter is a Regional Underwriting Manager for Enact with over 35 years’ experience in the mortgage industry, of which 28 years have been in the mortgage insurance industry.
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