U.S. Regulators Caution Financial Institutions on Loans to Unauthorized Workers

On Monday, the Trump administration released guidance from multiple financial regulators reminding banks and credit unions of the credit risks associated with lending to borrowers who are not authorized to work in the United States.

According to the guidance, individuals who lack legal work eligibility present elevated credit risk due to heightened uncertainty regarding their ability to earn income, maintain employment, and remain financially stable.

The directive was issued jointly by the Office of the Comptroller of the Currency (OCC), the Federal Deposit Insurance Corporation (FDIC), and the National Credit Union Administration (NCUA). The agencies encourage financial institutions to identify, measure, monitor, and control such risks through prudent underwriting practices that account for borrower work status.

“President Trump has made restoring integrity to America’s financial system a priority, and Secretary Bessent has provided strong leadership in ensuring that federal financial policy reflects that objective,” Comptroller of the Currency Jonathan Gould said in a statement to FOX Business. “Americans expect their banking system to support lawful business, not facilitate money laundering, or risks associated with criminal illegal immigration.”

The interagency guidance reminds banks and credit unions to factor credit risks into lending decisions for borrowers without work authorization in the U.S. (Ting Shen/Bloomberg via Getty Images)

Gould added that the guidance rests on existing obligations for financial institutions to understand their customers and manage risk appropriately, with a prospective borrower’s work authorization being a relevant consideration.

“Banks already have a responsibility to know their customers and appropriately manage risk. Our interagency guidance reinforces that obligation by making clear that institutions should account for the safety and soundness, compliance, and credit risks associated with serving individuals who are not authorized to work in the United States,” Gould explained.

A borrower’s authorization to work in the U.S. may be considered during mortgage application reviews. (Joe Raedle/Getty Images)

The agencies noted that the Consumer Financial Protection Bureau (CFPB) issued guidance in June informing lenders that they may evaluate a consumer’s legal ability to work and earn income in the U.S. when deciding on mortgages, credit cards, and similar products.

The CFPB explained that lacking work authorization can lead to income instability, such as when an applicant faces potential deportation. The bureau indicated that such information may be obtained through direct inquiry or via atypical identification documents, including an Individual Taxpayer Identification Number (ITIN), often used by those without proof of legal residency.

Credit card applications may likewise assess a prospective borrower’s work authorization status. (iStock)

The regulatory move follows a working paper from the Federal Reserve Bank of Dallas—circulated as a preliminary draft for professional comment—which found that undocumented immigrant inflows from 2021 to 2024 significantly raised housing demand while increasing employment and showing minimal measurable impact on wages.

Federal Reserve economists estimated that unauthorized immigrant worker flows accounted for roughly 30% of employment growth, about 30% of home-price growth, and approximately 20% of rent growth across the average metropolitan area between March 2021 and March 2024.

However, the authors stressed that these estimates apply to the average metro area examined and do not imply that immigration was the sole cause of nationwide housing cost increases.

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