Bills
| 3.23.22

Should ‘Dreamers’ Be Eligible for Federally-Backed Mortgages? (S. 1929)

Do you support or oppose this bill?

What is S. 1929?

(Updated March 11, 2020)

This bill — the Homeownership for DREAMers Act — would clarify that recipients of Deferred Action for Childhood Arrivals (DACA) (also known as Dreamers) cannot be denied mortgage loans back by the Federal Housing Administration (FHA), Fannie Mae, Freddie Mac, or the U.S. Department of Agriculture (USDA) solely because of their immigration status.

Argument in favor

Dreamers’ eligibility for FHA-backed mortgages has allowed many young people to buy homes and secure their economic futures. HUD’s recent decision to end Dreamers’ eligibility for FHA-backed mortgages has no legal basis and is an extension of the Trump administration’s persecution of Dreamers.

Argument opposed

Non-U.S. citizens without lawful residency’s ineligibility for FHA has been published policy since at least October 2003. While it was the Obama administration’s policy for HUD to guarantee FHA-backed mortgages for Dreamers, the Trump administration isn’t required to extend this policy (and is within its rights to decide against it).

Impact

DACA recipients (aka Dreamers); DACA recipients seeking to buy homes; Dreamers seeking to buy homes; Federal Housing Administration (FHA); Fannie Mae; Freddie Mac; and the U.S. Department of Agriculture (USDA).

Cost of S. 1929

A CBO cost estimate is unavailable.

Additional Info

In-Depth: Sen. Bob Menendez (D-NJ), ranking member of the Senate Housing Committee, introduced this bill to ensure that DACA recipients (also known as Dreamers) can’t be denied mortgage loans baked by the Federal Housing Administration (FHA), Fannie Mae, Freddie Mac, or the U.S. Department of Agriculture (USDA) solely because of their immigration status: 

"There is no legitimate reason for the Trump Administration to deny FHA-backed mortgages to Dreamers who worked so hard to secure protected status under DACA and who continue to contribute so much to the country they call home. It’s clear that this Administration, hamstrung by federal rulings that have prevented the mass deportation of DACA recipients, is now actively weaponizing the Department of Housing and Urban Development to carry out its bigoted anti-immigrant agenda. The Homeownership for Dreamers Act will prohibit for the federal government from discriminating against DACA recipients when applying for government-backed mortgage loans and in doing so ensure DACA recipients can continue to pursue the American dream of homeownership.”

Original cosponsor Sen. Catherine Cortez Masto (D-NV) adds that homeownership is crucial to ensuring young people’s financial futures: 

“For many young Nevadans, homeownership represents a crucial step in securing their financial futures. It’s unacceptable that this Administration continues to target the 13,000 Dreamers in Nevada, and thousands more nationally, by denying them housing loans simply because of their immigration status. I’m proud to cosponsor legislation that protects Dreamers’ eligibility to buy homes, invest in their futures and pursue the American dream.”

Sen. Cory Booker (D-NJ), who is pursuing the 2020 Democratic presidential nomination, adds that discriminating against Dreamers is an affront to American values: 

“Discriminating against Dreamers is an affront to the values we hold dear in America. These young people, who came to the United States as kids and call this country home, should not be barred from buying a home and pursuing the American dream. This legislation would prevent the Trump Administration from punishing DREAMers and denying them the opportunity to become homeowners.”

Bruna Bouhid-Sollod, DACA recipient and United We Dream Senior Communications Manager, expressed her organization’s support for this bill: 

“It was not enough for Trump when he killed DACA, which protected over 800,000 immigrant youth from deportation and allowed us to work and pursue educational opportunities. Now he’s come after our ability to purchase a home, put a roof over the heads of our families and to establish a foundation for our future. This is why immigrant youth of United We Dream support affirmative legislation that helps people without hurting people, like Senator Menendez's Homeownership for Dreamers Act that calls for an end to this discriminatory practice and reaffirms what it means to live free and without fear.”

In a statement to BuzzFeed News, Daily Lopez-Cid, then-president of the National Association of Hispanic Real Estate Professionals (NAHREP), noted that “[d]isqualifying DACA recipients would be a burden on the overall health and well being of the US housing market.” She added, “Now is not the time to deny DACA recipients from securing FHA-backed loans.” David Acosta, NAHREP’s 2019 President, wrote a letter in support of this bill on June 20, 2019. He wrote: 

“The National Association of Hispanic Real Estate Professionals (NAHREP) is disappointed with the U.S. Department of Housing and Urban Development’s (HUD) decision to officially deny Federal Housing Administration (FHA) loans to Deferred Action for Childhood Arrivals (DACA) recipients, provided in a letter to U.S. Representative Pete Aguilar (CA-31) on June 11, 2019. In the wake of this decision, NAHREP calls on Congress to swiftly pass the Homeownership for Dreamers Act. In the months leading up to HUD’s official response, NAHREP received alerts that HUD was unofficially advising lenders that DACA recipients were ineligible for FHA loans. During this time, HUD maintained the position that their policies surrounding DACA had not changed. However, HUD’s recent letter clearly states that DREAMers are ineligible for FHA-backed loans, in contrast to previous statements. Today, NAHREP urges the passing of H.R. 3154 Homeownership for Dreamers Act along with its companion bill in the Senate in order to reverse HUD’s decision with bipartisan support… Currently, there are approximately 700,000 individuals registered under DACA and an estimated 1.3 million who qualify for the program. These individuals have lived and worked in this country since they were children, contributing to the U.S. economy and deeply embedded into the social fabric of our society. While NAHREP ultimately supports the full passage of The American Dream and Promise Act of 2019, it is critical that FHA does not get ahead of the courts in deciding immigration law. If all other loan eligibility requirements are satisfied, taxpaying DACA recipients must not be denied solely on the basis of their DACA status.”

This bill has 13 Senate cosponsors, including 12 Democrats and one Independent. Its House companion bill, sponsored by Rep. Juan Vargas (D-CA) with 27 Democratic House cosponsors’ support, passed the House Financial Services Committee by a 33-25 vote on June 11, 2019.

This bill has the support of UnidosUS, United We Dream, National Fair Housing Alliance, Asian Real Estate Association of America (AREAA), National Association of Hispanic Real Estate Professionals (NAHREP), Mortgage Bankers, National Association for the Advancement of Colored People (NAACP), Leadership Conference on Civil and Human Rights, Center for Responsible Lending American Friends Service Committee Immigrant Rights Program in New Jersey, and Make the Road NJ.


Of Note: In a letter to Rep. Pete Aguilar (D-CA) in June 2019, HUD stated that DACA recipients are ineligible for FHA loans (a reversal of previous HUD policy on this matter). Len Wolfson, a HUD official, wrote, “Determination of citizenship and immigration status is not the responsibility of HUD and the Department relies on other government agencies for this information. Accordingly, because DACA does not confer lawful status, DACA recipients remain ineligible for FHA loans.” Wolfson added that non-U.S. citizens without lawful residency’s ineligibility for FHA has been published policy since “at least October 2003.” He further noted, “This same policy was incorporated in the Single-Family Housing Handbook in September 2015—under the previous Administration—and clearly states that ‘[n]on-U.S. citizens without lawful residency in the U.S. are not eligible for FHA-insured mortgages.’”

Earlier in 2019, HUD Secretary Ben Carson had denied that DACA recipients were being denied federally-backed loans. Sen. Carson made this statement in response to reports that HUD was quietly advising lenders to deny DACA recipients federal housing loans. These reports were first reported by HousingWire’s Dani Hernandez in September 2018, at which time she noted that she’d received “tons of emails from loan officers and other lender representatives telling me that they have been told by HUD officials that DACA borrowers are no longer eligible for FHA loans.” As an example, Hernandez cited an email stating that HUD Single Family Deputy Assistant Secretary Gisele Roget told a group of lenders at a conference in Santa Ana that DACA borrowers are no longer eligible for FHA loans. In March 2019, HousingWire reported the circulation of notices in which lenders claimed that HUD, the FHA, Fannie Mae and others had recently made a blanket declaration that DACA recipients were no longer eligible for mortgage approval. 

At an April congressional hearing, Carson said, “I asked around after I read that story [which was broken by BuzzFeed News]. No one was aware of any changes that had been made to the policy whatsoever. I’m sure we have plenty of DACA recipients who have FHA-backed loans.” Similarly, in a March 7, 2019 statement to HousingWire, HUD told HousingWire that there’d been no changes to its policies about loans to Dreamers and referred to a letter it sent to Sen. Menendez in December 2018 saying:

“The Department wants to be very clear that it has not implemented any policy changes during the current Administration, either formal or informal, with respect to FHA eligibility requirements for Deferred Action for Childhood Arrivals (DACA) recipients. HUD has longstanding policy regarding eligibility for non-U.S. citizens without lawful residency. Those policies have not been altered.”

In response to Carson’s denials, Rep. Aguilar said: 

“The explanation we received from HUD is inconsistent with the realities on the ground and statements made by Secretary Carson to members of the Appropriations Committee, and it does nothing to clarify the confusion created by the agency’s inconsistent policies. We know that DACA recipients have received these loans in the past, and it’s shameful that HUD is allowing the president’s anti-immigrant agenda to dictate housing policy.”

In a December 2018 letter to HUD when reports of DACA recipients being denied mortgages first came to light, Sens. Mendendez, Booker, and Cortez Masto wrote: 

“We are extremely alarmed about recent reports that the Department of Housing and Urban Development has implemented an unofficial policy of denying Federal Housing Administration insured loans to Deferred Action for Childhood Arrivals recipients. We are appalled that the Trump Administration would exploit a federal government program to deny Dreamers an opportunity of owning their own home, a cornerstone of the American dream… While federal courts have currently stopped President Trump from expelling DACA recipients from the country, this is yet another example of the Administration adopting underhanded tactics to punish DACA recipients for remaining in the United States.”

The senators added that they expected such policy changes to be issued only after their legality was established and the public had an opportunity to comment: 

“We find it extremely problematic that HUD would implement such a policy in an unofficial and haphazard manner and with no public input. And while we find this particular change to be abhorrent, we expect that any policy change that makes certain borrowers ineligible for FHA-insured mortgage loans would only be issued after sound and unambiguous legal reasoning, an opportunity for public input, and communication to FHA-approved lenders. Anything less unfairly leaves borrowers, lenders, and real estate professionals in a state of limbo.”

Historically, DACA recipients have been eligible for FHA loans if they met the requirements for non-permanent residents under the program. Under the Obama administration, HUD was backing DACA borrowers.

In March 2019, Fannie Mae declared its support for Dreamers and announced its intention to continue supporting mortgages for DACA recipients. In a lender bulletin, it said, “We have a longstanding policy on eligibility for non-U.S. citizen borrowers. Fannie Mae purchases and securitizes mortgages to non-citizens who are lawful permanent or non-permanent residents of the United States under the same terms available to U.S. citizens.” 

Fannie Mae said this wasn’t a change to its existing policies, but rather an effort to provide “additional guidance to help lenders determine eligibility for non-U.S. citizen borrowers” in response to customer feedback on the issue. Some lenders argue that Fannie Mae’s position on this issue strengthens the case for DACA recipients to have access to FHA-backed loans, since the FHA and Fannie Mae have similar criteria for their loans.

In a 2018 nationwide survey of 1,050 DACA recipients in 41 states and D.C., the Center for American Progress (CAP) found that 14% of respondents purchased their first home after receiving DACA status. Among respondents 25 and up, this share increased to 20%. These purchases benefit the broader economy, spurring job creation and infusing new cash into local economies.


Media:

Summary by Lorelei Yang

(Photo Credit: iStockphoto.com / courtneyk)