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Financial Services Law Insights and Observations


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  • DACA recipients eligible for FHA loans

    Agency Rule-Making & Guidance

    On January 20, the Federal Housing Administration (FHA) announced that Deferred Action for Childhood Arrivals (DACA) recipients are now eligible for FHA loans. Specifically, FHA is waiving the FHA Single Family Housing Handbook statement: “Non-US citizens without lawful residency in the U.S. are not eligible for FHA-insured mortgages.” As previously covered by InfoBytes, in June 2019, Len Wolfson, the Assistant Secretary for Congressional and Intergovernmental Relations at HUD sent a letter to Representative Pete Aguilar (D-CA) stating that DACA recipients are not eligible for FHA loans under FHA published policy, referring to the handbook statement. FHA is now reversing course, stating that the term “‘lawful residency’ pre-dates DACA and thus did not anticipate a situation in which a borrower might not have entered the country legally, but nevertheless be considered lawfully present.” In order to avoid confusion, FHA is waiving the Handbook subsection containing the statement in its entirety, but emphasizes that all other FHA borrower requirements remain in effect for all potential borrowers, including DACA recipients.

    Agency Rule-Making & Guidance FHA HUD DACA Mortgages

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  • National bank settles DACA discrimination class action


    On January 8, the U.S. District Court for the Northern District of California granted final approval to a settlement resolving allegations brought by a national class and a California class against a national bank concerning the denial of credit to recipients who held valid and unexpired Deferred Action for Childhood Arrivals (DACA) status. In a motion for preliminary settlement filed last June, the plaintiffs claimed that the bank allegedly determined DACA recipients to be ineligible for direct auto financing because of their noncitizen status, even though “[t]here is no federal or state law or regulation that prohibits banks from lending to non-citizens generally, or DACA recipients specifically, based on their status as non-citizens.” The bank moved to dismiss, claiming the plaintiffs failed to plead facts sufficient to state claims under the Equal Credit Opportunity Act and the Fair Credit Reporting Act. The parties engaged in discovery, but ultimately agreed to stay the case and engaged a mediator to assist with settlement discussions.

    Under the terms of the settlement, the bank is required to provide verified California class members up to $2,500 per claim and national class members up to $300 pending submission of a valid claim. The settlement also provides injunctive relief, a service award to the class representative, attorneys’ fees and costs, and settlement administration costs. Additionally, the bank will amend its direct auto lending practices in order “to extend loans to current and valid DACA recipients on the same terms and conditions as U.S. citizens,” and will provide class counsel an annual status report detailing the status of its programmatic relief for a two year period.

    Courts DACA Consumer Lending Auto Finance ECOA FCRA Consumer Finance

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