On July 13, the OCC, FDIC, and NCUA issued interagency guidance addressing how banks should approach lending to individuals not legally authorised to work in the United States.
The guidance was issued pursuant to Executive Order 14406 and reminds supervised financial institutions of their existing credit risk management obligations under current federal frameworks.
Regulators advise institutions to consider how a borrower’s employment authorisation status may directly affect their capacity to repay loans over the life of a credit agreement.
The agencies explain that lending to borrowers without work authorisation may present elevated credit risk, given greater uncertainty around income stability and continued employment.
Institutions are expected to identify, measure, monitor, and control these risks through safe and sound underwriting practices consistent with established supervisory standards.
On the question of repayment, projected repayment capacity should account for potential interruptions in employment or income caused by termination, suspension, or removal from the United States.
The guidance also flags additional challenges that may arise when contacting borrowers or locating and repossessing unaffixed collateral, including automobiles, recreational vehicles, and boats.
When it comes to documentation, relevant considerations include whether employment income is current, verifiable, stable, and likely to continue, with supporting materials potentially including paystubs, W-2s, tax returns, and bank statements.
The agencies further warn that significant portfolio concentrations tied to particular geographic markets or industries affected by immigration enforcement could produce correlated credit deterioration across affected portfolio segments.
Financial institutions are also advised to review the CFPB’s June 8, 2026 Statement on Ability To Repay and Immigration Status, which addresses creditors’ obligations under the Truth in Lending Act and Regulation Z.
That CFPB statement explains that the Equal Credit Opportunity Act and Regulation B permit consideration of an applicant’s immigration status when evaluating a creditor’s rights and remedies regarding repayment.
Supervised institutions should confirm that their practices comply with the Truth in Lending Act, Regulation Z, the Equal Credit Opportunity Act, and Regulation B, and continue monitoring further supervisory developments as they emerge.