Lending to a non-U.S. citizen is a business decision that depends on the amount of risk your institution is willing to accept. Should the borrower default on the loan, you may have to litigate in U.S. federal court, where rules and procedures will differ from Illinois state courts. The choice between initiating a collection action in a federal court versus an Illinois court will require analysis of the risks of both approaches and may depend on where the borrower resides when the action is initiated. 28 USC 1332(a). Even if you do obtain a judgment against a borrower, there may be further complications in enforcing the judgment if the borrower relocates to a foreign country.

We note that in considering the customer’s ability to repay the loan, Regulation B permits you to consider a loan applicant’s “immigration status and ties to the community (such as employment and continued residence in the area)” without violating the prohibition on discrimination based on a loan applicant’s national origin. Official Interpretations, 12 CFR 1002, Paragraph 6(b)(7), Comments 1 and 2. However, we recommend caution in making loan decisions solely based on immigration status, as the Fair Housing Act does not include a similar exception for considering a loan applicant’s immigration status. See 42 USC 3605.

If the loan is a mortgage loan secured by real property, and your institution sells mortgages on the secondary market, you should check investor requirements for lending to non-U.S. citizens. For example, both Fannie Mae and Freddie Mac have specific guidelines for lending to non-U.S. citizens in their Selling Guides and on their websites: Fannie Mae: Non-U.S. Citizen Borrower Eligibility RequirementsSimplified Guidelines for Permanent and Nonpermanent Resident Aliens.