Hispanic Homeownership Becoming Trickier Due to FHA Mortgage Denials

Approved Federal Housing Administration (FHA) lenders have been accused of denying mortgage applications for DACA recipients, making Hispanic homeownership more difficult. DACA stands for Deferred Action for Childhood Arrivals and is a federal policy allowing some individuals who were unlawfully brought to the United States as children to defer deportation proceedings and become eligible for a U.S. work permit.

At the end of 2018, BuzzFeed New reported that the Department of Housing and Urban Development was advising FHA-approved lenders to deny loans to DACA recipients.

What is an FHA Loan?

An FHA loan is a mortgage that comes from a lender approved by the federal agency. These loans were designed with low-to-moderate income borrowers in mind, and generally require lower down payments and credit scores than other types of loans. With an FHA loan, a person can borrow up to 96.5 percent of the value of a home, according to investopedia.

FHA loans are particularly important for young and low-income people who are hoping to buy a home, and many DACA recipients fall into these categories. People who do not have citizenship status, including DACA residents, are eligible for loans so long as they meet certain criteria, according to BuzzFeed.

FHA Loan Denial for DACA Recipients

While denying loans that benefit Hispanic homeownership is not an official policy, housing industry groups have reported being verbally instructed to deny these loans. Lenders say that while officals at the FHA and the Department of Housing and Urban Development (HUD) may not be writing these instructions into policy, the message is conveyed at conferences and during calls with their approved lenders.

Chicago loan officer Jose Pepe Rincon told BuzzFeed that FHA and HUD officials have previously advised him that DACA recipients are indeed eligible for government-insured mortgages, like FHA loans, BuzzFeed News reports. In the last few years, Rincon said he has had 42 FHA loans approved for DACA recipients. But in May 2018, federal officials began telling him that DACA recipients were no longer to be approved for FHA loans.

“There is nothing written, which is unusual from HUD,” Rincon said. “They’re usually pretty firm on what can be done and what can’t be done.”

Loan officers, realtors, industry associations, and DACA recipients told BuzzFeed News that they, too, noticed the change, which comes after President Donald Trump’s unsuccessful attempt to repeal the DACA program entirely.

Three U.S. Senators—Democrats Bob Menendez, Cory Booker, and Catherine Cortez-Masto—wrote a letter to HUD Secretary Ben Carson demanding answers about why DACA recipients are being denied FHA loans, reportedly at the direction of HUD, according to BuzzFeed.

“We are appalled that the Trump Administration would exploit a federal government program to deny Dreamers an opportunity of owning their own home, a cornerstone of the American dream,” the senators wrote in their letter. “This is yet another example of the Administration adopting underhanded tactics to punish DACA recipients for remaining in the United States.”

Carson has claimed that he was unaware of why DACA recipients were being denied housing loans from the FHA

A lender at USA Mortgage found that perplexing since, according to the lender, “it’s HUD’s decision that FHA loans can no longer be made to DACA. We are following HUD rules.”

Despite the challenges, Hispanic homeownership is on the rise for the third consecutive year, according to the National Association of Hispanic Real Estate Professionals. Contributing factors to this increased rate of Hispanic homeownership is attributed to population increase, household formation, and a more Hispanics in the workforce.

While FHA and HUD officials have not put the new guidance into writing, Housing Wire has reported that a growing number of lenders are publishing their own guidelines advising that DACA recipients are no longer eligible for FHA loans.

Join a Regions Bank FHA Mortgage Class Action Lawsuit Investigation

If you had an FHA mortgage loan with Regions Bank, and you sold, refinanced or paid off your mortgage early, you may have been charged a post-payment interest fee. If so, you may be owed money.

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This article is not legal advice. It is presented
for informational purposes only.