Biden Administration Enacts Several Mortgage Provisions in First Week
Written By: Joel Palmer, Op-Ed Writer
Less than a week since assuming the presidency, the new Biden administration has made an impact on the housing and mortgage industries.
Last week, the Federal Housing Administration (FHA) announced that individuals classified under the “Deferred Action for Childhood Arrivals” program (DACA) can now apply for FHA mortgages. DACA applicants must also be legally permitted to work in the U.S. to be eligible for an FHA mortgage.
The change is effective immediately. An updated version of the FHA Single Family Housing Handbook will remove the following statement: “Non-US citizens without lawful residency in the U.S. are not eligible for FHA-insured mortgages.”
According to FHA, this language has been part of FHA guidelines since 2003. It was added to the FHA handbook by the Obama administration in September 2015.
“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” states the FHA statement. “To avoid confusion and provide needed clarity to HUD’s lending partners, FHA is waiving the above referenced FHA Handbook subsection in its entirety. In a subsequent update to the FHA Handbook the language will be removed.”
Last year, the group Democracy Forward called for an investigation in allegations that the Trump administration enacted a policy to bar DACA recipients from obtaining FHA loans. Several members of Congress also accused the former administration of telling lenders that DACA recipients did not meet the lawful residency requirement for FHA mortgages.
DACA applicants will have to meet other FHA requirements, including:
Obtaining a mortgage for a property that will serve as their primary residence
Having a valid Social Security Number
Being eligible to work in the U.S. by way of an Employment Authorization Document issued by U.S. Citizenship & Immigration Service
Satisfying the same requirements, terms and conditions as those of U.S. citizens
The Biden administration also instructed HUD and other federal agencies to extend the moratorium on foreclosures and evictions for single family mortgages insured by FHA. The new moratorium is extended through at least March 31.
The moratorium prohibits servicers from initiating or proceeding with foreclosure on HUD insured or guaranteed single family forward and reverse mortgages, except for those secured by legally vacant and abandoned properties.
HUD also requires mortgage servicers to provide up to six months of COVID-19 forbearance when a borrower experiencing a financial hardship due to COVID-19 requests this assistance, and up to an additional six months of COVID-19 forbearance for a borrower who requests an extension of the initial forbearance.
Also last week, President Biden appointed Dave Uejio as acting director of the Consumer Financial Protection Bureau (CFPB) after its director, Kathy Kraninger, resigned at the new administration’s request. Uejio will run the agency pending Senate confirmation of Federal Trade Commission member Rohit Chopra as its permanent director.
Kraninger's term was due to end in 2023. She was appointed by Trump.
About the Author
As an NAMU® Opinion Editorial Contributor, Joel Palmer is a freelance writer who spent 10 years as a business and financial reporter and another 10 years in marketing for the insurance and financial services industries. He regularly writes about the mortgage industry, as well as residential and commercial real estate, investments, and retirement income planning. He has also ghostwritten books on starting a business, marketing, and retirement income planning.
