On May 28, the Federal Housing Administration (FHA) issued Mortgagee Letter (ML) 2021-12, formalizing its announcement earlier this year that non-permanent residents with Deferred Action for Childhood Arrivals (DACA) status are eligible for FHA-insured financing.
For the first time, FHA also provided guidance on other non-permanent resident aliens who are authorized to work in the United States, but do not hold the U.S. Citizen and Immigration Services (USCIS) Employment Authorization Document (EAD). Historically, the Agency has only acknowledged the EAD as a valid work authorization, with an exception for refugees and asylees holding USCIS form 1-94.
With the new ML, FHA now allows financing for H-1B visa holders, provided they have a year’s history with the sponsoring employer. As with the EAD, if the visa renews within a year, lenders assess the likelihood of renewal. If the visa has previously been renewed, the lender may assume it will be again. If not, the lender must “determine the likelihood of renewal based on information from the employer or the USCIS.” FHA has not provided further guidance on how lenders should make that determination, but would likely accept a Verification of Employment (VOE) reflecting that employment continuance is likely.
Lenders should note that eligibility is still limited to EAD holders, H-1B visa holders, borrowers with approved asylee/refugee status, and residents of the Free Associated States (the Federated States of Micronesia, the Republic of the Marshall Islands, or the Republic of Palau). Borrowers with work authorization under other visa types, including the L (Intracompany Transferee) Visa, are still not eligible for FHA financing.
The new ML also clarifies that asylees and refugees must have been granted that status, as evidenced by an approved Application for Asylum or Withholding of Removal; borrowers who are in the application process are not eligible.
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