NCUA Issues Guidance on Lending to Borrowers Without Work Authorization

The NCUA, FDIC and OCC have issued interagency guidance reminding financial institutions to consider the credit risks associated with lending to individuals who are not legally authorized to work in the United States. The guidance does not prohibit such lending or create new requirements.

Credit unions should evaluate whether a borrower's income is verifiable, stable and likely to continue, including the potential impact of employment interruption or loss of work authorization. They should also consider collateral recovery, portfolio concentrations and possible effects on loan classification and the allowance for credit losses.

The guidance also reinforces existing obligations under Regulation Z and Regulation B. Immigration status may be considered when relevant to repayment capacity or the credit union's rights and remedies, but decisions should be individualized, consistently applied and compliant with fair lending laws.

Credit unions should review underwriting, documentation, account-management and fair lending policies to ensure these risks are appropriately addressed.

The agencies issued the guidance in accordance with Executive Order 14406, "Restoring Integrity to America's Financial System,"