WASHINGTON — Two days before Thanksgiving, Edith Aguirre Vazquez got a phone call she wasn’t expecting — it was a home loan officer telling her she wouldn’t be able to close on the house she was about to buy because of her immigration status. Aguirre, 22, has been on the Deferred Action for Childhood Arrivals (DACA) program for the past six years.
Aguirre, a medication aide at a nursing and rehab facility, spent two years saving up to buy a home. A few months ago, she finally found a place within her budget where she could see herself and her husband setting up their lives — a one-story brick house on a hill with a big backyard in Bowie, Texas.
“I had already sent all the paperwork that I needed; we had just done the house inspection,” Aguirre said.
But then came the call from her lender. Aguirre is one of several DACA recipients who have been denied government-insured home loans from lenders following unofficial instructions from Trump administration officials to shut them out. DACA recipients, loan officers, Realtors, and industry associations told BuzzFeed News that they have noticed the change, which has never been announced as a formal policy, particularly in the past year, amid a slowdown in the housing market nationwide.
“I’ve been here since I was 3 years old,” Aguirre said. “I feel as American as anybody else and I’m kind of getting doors shut, getting blamed for something that you had no choice of.”
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People working with DACA recipients on housing say they have noticed the change in guidance in the year since President Donald Trump unsuccessfully moved to rescind the program, which protects people who were brought to the US illegally as children from deportation.
While Trump has not been able to get rid of DACA (he’s been blocked by the courts from winding it down), DACA recipients and mortgage lenders told BuzzFeed News that in the meantime one of the ways the administration is working to reduce benefits for DREAMers is by denying them Federal Housing Administration (FHA) loans.
FHA loans are designed to be more accessible to low-income buyers. They require a lower down payment than most conventional mortgages. Because they’re insured by the government, they provide assurance for lenders in case the borrower defaults on payments.
The lender at USA Mortgage who was working with Aguirre told BuzzFeed News he had no comment on her situation but pinned the blame on the administration. “It was not USA Mortgage decision, it’s HUD decision that FHA loans can no longer be made to DACA. We are following HUD rules,” he said.
HUD spokesperson Brian Sullivan pointed to an FAQ posted on the department’s online resource center, which does not specifically address DACA but says noncitizens are eligible for loans if they meet various criteria. He did not respond to questions about whether HUD’s policy has changed regarding FHA-backed loans and DACA, and why officials have begun giving verbal advice specifically not to issue the loans to DACA recipients.
Loan officers who work for lenders, like banks and mortgage brokers, are licensed by HUD to grant FHA-backed loans, as long as they abide by guidelines in HUD handbooks and advice they receive from HUD and FHA officials. When they’re unclear on a particular type of loan, lenders typically reach out to the FHA’s hotline to ask for clarification on specific cases.
There has been no official policy change from the Department of Housing and Urban Development, which oversees the FHA. Lenders say FHA and HUD officials are not putting in writing their recent advice not to issue FHA-backed loans to DACA recipients. But at conferences and on hotline calls, lenders are now being told not to approve FHA-backed loans for homebuyers who are on DACA.
One loan officer in Chicago, Jose Pepe Rincon, told BuzzFeed News that FHA and HUD officials have advised him in the past that DACA recipients are eligible for government-insured mortgages. He has had 42 FHA-backed loans approved for DACA recipients in recent years, about 10% of his total client base.
But that changed around May this year, he said, when officials started telling him they would not approve these loans. In four separate phone calls in recent months to the FHA hotline for lenders, Rincon said he was told the agency would no longer insure DACA recipients for home loans.
“HUD actually insures the other types of work permits, such as the visa O-1, other types of work visa who have gotten a work permit, others who are in the process to become permanent residents,” he said.
Rincon said that in the 12 years he’s been a loan officer, it’s been the practice of the FHA and HUD to give guidance over the phone and to follow up with the same advice in writing. He hasn’t been able to get any of the guidance on DACA recipients in writing.
“There is nothing written, which is unusual from HUD.”
“The conversations that we have had on the DACA borrowers just end at the phone call and they are not able to provide anything in email,” he said, adding that FHA and HUD officials also do not point to a specific part of the guidelines that would back up their stance. “There is nothing written, which is unusual from HUD. They’re usually pretty firm on what can be done and what can’t be done.”
DACA status is not directly addressed in the FHA single-family housing handbook, the document lenders refer to for rules on government-backed housing loans. It says only that an Employment Authorization Document — which DACA recipients have — is necessary “to substantiate work status” for noncitizens.
Lenders say FHA and HUD officials are now telling them the specific type of EAD that DACA recipients have, a C-33 EAD, is no longer valid for government-backed loans.
Danielle Hernandez, an underwriter and compliance officer for Chicago-based lender Newcastle Home Loans, says her company has been able to get FHA-backed loans approved despite that verbal guidance because the written rules in the handbook still don’t exclude DACA recipients.
”Until they put it in writing they have to insure the loan,” Hernandez said.
She said she’s heard from more than 200 lenders and borrowers in the past year who have been told verbally by FHA or HUD officials that they should not issue FHA-backed loans to DACA recipients. She wrote a blog post in September about the apparent contradiction between what the FHA and HUD are telling lenders verbally and the rules written in their handbook.
“They refuse to say [in writing] ‘no, we will not make loans to DACA borrowers,’ but they’re discouraging it. It’s like, you know, ‘you’re allowed to do this but we don’t want you to do this,’” Hernandez said.
Hernandez did once get a response in writing after emailing HUD’s general resource center, asking for clarification on whether DACA recipients’ work permits are now considered insufficient to get an FHA-backed loan. In the email dated Aug. 24, which Hernandez shared with BuzzFeed News, the FHA resource center said, “No, C33 is unacceptable.”
“I emailed those people and asked what guidelines they don’t meet and they never replied to me,” she said.
In an email to Hernandez on June 22, one lender who works for a national mortgage bank wrote, “I wanted to let you know that one of our corporate underwriters attended a FHA training last week in Seattle and I attended an FHA roundtable in Santa Ana [California] yesterday and they were clear at both sessions that DACA borrowers are not eligible for FHA financing.”
The lender added that the person providing the verbal guidance was Gisele Roget, the deputy assistant secretary for single-family housing at HUD.
“She indicated that they have communicated this to all HOCs [Housing Opportunities Commissions] and that is the direction they are providing on this topic,” she continued.
This lender and several others who read Hernandez’s blog post and emailed her after hearing from the FHA and HUD did not respond or said they could not comment when contacted by BuzzFeed News.
Another lender based in Oklahoma wrote to Hernandez on June 28, “My Underwriter dialed in to the FHA Resource Center and they told us DACA borrowers cannot get FHA insuring? Is this true?”
Jonathan Dominguez, 20, was one first-time homebuyer who was able to get an FHA-backed loan through Hernandez’s company after being turned down by another lender who said they’d been told by the FHA not to approve his loan.
He said he had been preapproved for an FHA-backed loan, and had made an offer on a house in Columbus, Indiana. He called the lender to let them know.
“They said, ‘okay, cool.’ Then they called me and said, ‘hey, because of a recent change, we can’t approve the loan anymore.’ It set us back, like, two months,” Dominguez told BuzzFeed News.
Brian Chappelle, a former FHA official who now works with lenders to help them “understand HUD rules,” said he heard for the first time in June that HUD was telling lenders it would not insure loans for DACA recipients. He asked HUD to put out a clear written guidance for all lenders, but has not seen one so far.
“Most lenders I talk to I caution them against doing DACA loans because HUD won’t give us a definitive answer,” Chappelle said.
But, based on the advice individual lenders have received, he said, “In this issue, to me, there is no question that a borrower with DACA status today is not eligible for an FHA loan.”
Real estate agents, too, have noticed the change in how FHA and HUD officials are advising people working with DACA recipients. The National Association of Hispanic Real Estate Professionals (NAHREP) said it is hearing of an increasing number of DACA recipients being turned down for FHA-backed loans under the Trump administration.
“Disqualifying DACA recipients would be a burden on the overall health and well being of the US housing market,” said Daisy Lopez-Cid 2018 NAHREP’s president in a statement to BuzzFeed News, adding that Latinos have been responsible for 59% of homeownership growth in the US over the past five years.
“Now is not the time to deny DACA recipients from securing FHA-backed loans,” she said.
“In my eyes they’re doing this to restrict what the DREAMers can do.”
Diego Corzo, a Realtor in Austin and a DACA recipient himself, said he noticed a change a few months ago and heard as recently as three weeks ago from some lenders that they can no longer work with DACA recipients for FHA-backed loans.
“It wasn’t announced in the news or anything, but it was just sort of put out there as ‘hey, this is a new restriction,’ and then boom, we were unable to qualify,” Corzo added. “In my eyes they’re doing this to restrict what the DREAMers can do.”
The ambiguity of the written HUD guidelines has been an issue for members of the Mortgage Bankers Association, too — the organization sent HUD a letter in June asking for clarification on various issues, including how lenders should handle FHA loans for DACA recipients.
The letter recommended that HUD make it clear in writing how to handle mortgage applicants with DACA. HUD has not responded to the association’s letter.
“There remains confusion among mortgage lenders regarding the eligibility of individuals with deferred immigration status for FHA-insured loans,” said Dan Fichtler, the Mortgage Bankers Association’s director of housing finance policy. “MBA has asked HUD to provide clarity on this matter to ensure that lenders are able to serve all eligible borrowers while operating with greater certainty.”
Corzo said he suggests DACA recipients consider conventional loans since the FHA program appears to be in question. But some lenders are also becoming increasingly uneasy about issuing any loans to DACA recipients because of the uncertainty of their immigration status under this administration.
Aguirre said she’s already lost the house she really wanted to settle into with her husband.
“You could see it at the top of the hill. That’s what caught my attention. I could already imagine us putting a pool there,” she said. “We were at the appraisal and the lender he said he wasn’t going to charge me for that because it was his mistake.”
By the time she got the call from the loan officer, she had already put down a 10-day option fee and inspection fee for the house. She said she’s now hoping to bypass lenders altogether and is looking for a home to buy directly from an owner.
“They knew from the beginning that I had DACA. So I mean, I don’t know.” ●
Aguirre applied for a house in Bowie, Texas. An earlier version of this post misstated the name of the town.