In accordance with Executive Order 14406 “Restoring Integrity to America’s Financial System,” the National Credit Union Administration, along with fellow agencies the Office of the Comptroller of Currency and the Federal Deposit Insurance Corporation, have issued guidance on lending to individuals not legally authorized to work in the United States. The guidance serves to “remind supervised financial institutions of their existing obligations with respect to credit risk management.”

The interagency statement addresses the uncertain nature of “non-work authorized borrowers,” and the increased risk it plays as income generation, employment, and overall financial stability are more volatile for these individuals as a result of their status.

However, where the EO is quite firm in its statement that the Administration will not “permit risks to our financial system posed by the extension of credit or financial services to the inadmissible and removable alien population,” the guidance from the agencies is more reserved, instead urging financial institutions to use safe and sound underwriting when considering an applicant’s borrowing. “When lending to non-work authorized borrowers, financial institutions should consider whether uncertainties related to employment authorization may affect the stability and sustainability of income, repayment capacity, collateral recovery, or other factors relevant to credit risk.” [emphasis added]

The guidance continues by breaking out considerations pertaining to the source of repayment, collateral considerations, documentation & verification, portfolio & concentration risk considerations, and consumer compliance risk. All reinforce existing guidelines financial institutions should presently consider when performing loan underwriting to ensure the safety and soundness of the organization.

The guidance from the statement was published July 13, just short of the 60-day deadline imposed by the Executive Order published May 19.