Yes, we believe that you may reject this application for a number of reasons, and this decision would not violate the Equal Credit Opportunity Act and Regulation B’s prohibition of discrimination in loan decisions. We do recommend carefully documenting your reasons for rejecting the application and retaining a written account of the conversation in which the applicant admitted that he is an illegal immigrant.
First, the applicant’s verbal statement contradicted his later admission regarding his immigration status. Because it is a crime to make a false statement on a loan application, you could reject the application solely on that basis. Second, while you are not required to reject an applicant based on the applicant’s immigration status, you are permitted to consider an applicant’s immigration status and could reject the application on that basis. Third, if you sell mortgage loans on the secondary market, the secondary market purchaser’s requirements may require you to reject applicants who cannot demonstrate lawful residency in the United States.
For resources related to our guidance, please see:
- U.S. Criminal Code, 18 USC 1014 (“Whoever knowingly makes any false statement or report . . . for the purpose of influencing in any way the action of . . . any institution the accounts of which are insured by the Federal Deposit Insurance Corporation . . . shall be fined not more than $1,000,000 or imprisoned not more than 30 years, or both.”)
- Regulation B, 12 CFR 1002.6(b)(7) (“A creditor may consider the applicant’s immigration status or status as a permanent resident of the United States, and any additional information that may be necessary to ascertain the creditor’s rights and remedies regarding repayment.”)
- Fannie Mae Non-U.S. Citizen Borrower Eligibility Requirements (“Fannie Mae purchases and securitizes mortgages made to non–U.S. citizens who are lawful permanent or non-permanent residents of the United States under the same terms that are available to U.S. citizens. . . . By delivering the mortgage to Fannie Mae, the lender represents and warrants that the non-U.S. citizen borrower is legally present in this country.”)
- Freddie Mac Simplified Guidelines for Permanent and Nonpermanent Resident Aliens (“With our Single-Family Seller/Servicer Guide (Guide) requirements for Permanent and Nonpermanent Resident Aliens, all of your customers who have lawful residency in the United States — U.S. citizens, permanent resident aliens and nonpermanent resident alien immigrants — are eligible . . . .”