The Federal Deposit Insurance Corporation, together with the Office of the Comptroller of the Currency and the National Credit Union Administration, issued interagency guidance reminding supervised financial institutions of their existing credit risk management obligations when lending to individuals not legally authorized to work in the United States. The agencies said these borrowers may present elevated credit risk because their ability to generate income, maintain employment and remain financially stable may be more uncertain. Institutions should identify, measure, monitor and control those risks through safe and sound underwriting that assesses a borrower’s willingness and capacity to repay under the terms of the credit obligation. The guidance focuses on source of repayment, collateral, documentation and verification, portfolio concentration risk and consumer compliance risk. It says income tied to unauthorized employment may be less reliable because of possible job loss, expired work authorization, inability to obtain lawful reemployment or removal from the United States, and that institutions should consider whether repayment capacity remains adequate under scenarios involving employment or income interruption. It also highlights potential challenges in enforcing security interests over movable collateral, calls for verification of income and other relevant documentation, and notes that concentrated exposures in markets, employers or industries affected by immigration enforcement or workforce disruptions may create correlated portfolio deterioration. In addition, institutions are advised to review the Consumer Financial Protection Bureau’s June 8, 2026 statement on ability to repay and immigration status in light of obligations under the Truth in Lending Act and Regulation Z, and the Equal Credit Opportunity Act and Regulation B. The agencies said the guidance was issued in accordance with Executive Order 14406, which directed action to address risks to the financial system from extending credit or financial services to the inadmissible and removable population.
Federal Deposit Insurance Corporation2026-07-13
Federal Deposit Insurance Corporation, Office of the Comptroller of the Currency and National Credit Union Administration issue guidance on credit risk in lending to non-work authorized borrowers
The Federal Deposit Insurance Corporation, Office of the Comptroller of the Currency and National Credit Union Administration issued guidance reminding supervised institutions to apply existing safe and sound underwriting standards when lending to borrowers not legally authorized to work in the United States. The agencies said these loans may carry elevated risk because income and employment may be less stable, and they directed institutions to consider the Consumer Financial Protection Bureau’s June 8, 2026 statement on ability to repay and immigration status.