CFPB Issues Statement on Considering Immigration Status as Part of Ability-to-Repay Analysis  

The CFPB issued a statement addressing how analysis of a borrower’s ability to repay a mortgage loan may be affected if the borrower’s immigration status makes them non-work eligible or subject to deportation.

TILA regulations require that lenders make a reasonable and good faith determination as part of the origination process that the borrower will have a reasonable ability to repay their loan.  This can include consideration of the borrower’s employment status and expected employment income.  Lenders need not account for post-closing developments which cannot be reasonably anticipated based on the information available during origination.  However, if the available information indicates that there will be a post-closing change in repayment ability, the lender must consider that information as part of reasonably assessing the borrower’s ability to repay.

The CFPB’s statement explains that where a consumer’s ability to repay is based on continued income from employment in the United States, information about the borrower’s immigration status may implicate the lender’s reasonable expectations on whether that income will continue.  The statement provides, as an example, that a lender may regard a borrower who is neither lawfully present nor permitted to work in the United States as being subject to removal, in light of the current administration’s stated policy of removing any person who is unlawfully present in the United States.  Any such removal would mean the borrower would not be able to continue earning income from U.S.-based employment.  In turn, a failure to account for such a reasonably expected change in income may not comply with the lender’s obligation to reasonably assess the borrower’s repayment ability.

The statement notes that there are many different types of immigration statuses in the United States and that the CFPB will not be providing a comprehensive analysis of how different types of immigration status should affect a lender’s reasonable expectations about the borrower’s continued employment and income.  Instead, the CFPB expects lenders to use their judgment in considering factors such as the borrower’s immigration status, lawful presence, authorization to work, and other factors that may indicate risk of removal.