Feb 12, 2019 19-04

UNPDATED GUIDANCE FHA Non-Permanent Resident Alien and DACA Borrowers

On January 17, 2019, MFA issued lender memo 19-03 to participating lenders, stating that MFA will no longer allow loan reservations for DACA borrowers based upon FHA’s position that residents in the United States on DACA status are not lawful residents. This memo provides additional information and clarifies that MFA will not impose any additional overlays for borrowers who are DACA residents. MFA will only require that participating lenders deliver eligible mortgage loans for purchase by MFA.

We understand that most, if not all, of our participating lenders have or had independently reached the conclusion that DACA borrowers are not eligible for FHA loans based on participating lenders’ independent assessments of FHA’s guidance with respect to FHA’s policies. Like many of you, we have also received written guidance from FHA.

On February 5, 2019, the FHA Customer Service Team issued an email response to our question regarding eligibility of DACA borrowers for FHA loans.  In response to MFA’s specific question concerning DACA borrower eligibility, FHA stated, “people residing in the U.S. under DACA – EAD Code C33 are not currently eligible for FHA Financing at this time.” The support cited for this answer was HUD Handbook 4000.1 Section II.A.1.b.ii. (A)(8)- (9). We have been informed that individual lenders have received similar communications from FHA and have made their own internal decisions related to DACA borrower eligibility and insurability risk.  

MFA has not received any prescriptive guidance from Fannie Mae on this issue. Fannie Mae has only stated that lenders must meet the requirements outlined in Fannie Mae’s Selling Guide.

MFA will not impose additional overlays regarding borrowers in a DACA citizenship status, but lenders must deliver eligible mortgage loans. Our participating lenders are best qualified to make a determination regarding the eligibility of DACA residents for the various loan types sold to MFA through our contracted service provider, based on the guidance provided by FHA and Fannie Mae. As referenced in the contractual agreements between MFA and participating lenders, MFA requires that lenders submit eligible mortgage loans. In the event a loan cannot be insured or is found to be ineligible, the existing remedies of the lender agreement will apply.

MFA continues to support our strong partners in meeting the housing needs in New Mexico, to make our programs accessible, and to provide quality affordable housing opportunities to all New Mexicans.