Lending to a non-U.S. citizen is a business decision that depends on the amount of risk your institution is willing to accept. Here, we think the risks are relatively low, because the borrowers and, more importantly, the collateral securing the mortgage loan are located in Illinois.
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. 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.
Also, if your institution plans to sell the mortgage loan 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, which you can find in our resources section below.
For resources related to our guidance, please see:
- Property Owned by Aliens Act, 765 ILCS 60/7 (“All aliens may acquire, hold, and dispose of real and personal property in the same manner and to the same extent as natural born citizens of the United States . . . .”)
- Official Interpretations, Regulation B, 12 CFR 1002, Paragraph 6(b)(7), Comments 1 and 2 (“The applicant’s immigration status and ties to the community (such as employment and continued residence in the area) could have a bearing on a creditor’s ability to obtain repayment. . . . A denial of credit on the ground that an applicant is not a United States citizen is not per se discrimination based on national origin.”)
- Fair Housing Act, 42 USC 3605 (“Discrimination in residential real estate related transactions. . . .”)