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HUD Responds to Financial Services Committee’s Claims

The Department of Housing and Urban Development (HUD) responded to claims Thursday by the House Financial Services Committee that it excluded excluding Deferred Action for Childhood Arrivals (DACA) recipients from the Federal Housing Administration’s (FHA) mortgage insurance program.

A HUD spokesperson told DS News that the FHA's policy has not changed under the Trump Administration, the Obama Administration, or even the Bush Administration.

"Any entity asserting that the Obama Administration deemed DACA recipients eligible for FHA loans or that the Trump Administration changed this policy is incorrect. FHA’s handbook was updated in 2015 by the Obama Administration and clearly states that ‘non-U.S. citizens without lawful residency in the U.S. are not eligible for FHA-insured mortgages.’ This policy has never changed," the HUD spokesperson said.

House Financial Services Committee Chairwoman Maxine Waters, along with Congressman Al Green, requested an investigation into HUD based on their claims.

“It appears that HUD may have violated the [Administrative Procedure Act] in initiating a policy or practice requirements change that carries the force of law without notice and public input,” the lawmakers wrote in a letter. “The new policy prohibiting DACA recipients from receiving FHA loans limits opportunities for homeownership in communities throughout the United States and disenfranchises individuals who are residing in the United States legally. This runs counter not only to the APA, but to the mission of HUD.”

The letter went on to say that the Committee reviewed internal HUD and FHA communications that raise concerns that HUD could have violated the Administrative Procedure Act (APA) by “failing to provide adequate notice of this policy change and meaningful opportunity to comment.”

“The Committee is concerned that HUD officials may have made repeated false and misleading statements to Members of Congress throughout 2018 and 2019 regarding DACA recipients’ eligibility for FHA loans,” the letter wrote. “The APA was intended to preserve individual rights against the abuse of administrative power. By prohibiting DACA recipients from receiving FHA loans without public input, HUD has disenfranchised a vulnerable population residing in the United States legally.”

The Financial Services Committee added that documents obtained by the Democracy Forward Foundation in 2019 states that from the creation of DACA in 2012 until 2018, the FHA regularly provided mortgage insurance mortgages made to DACA recipients.

“Shortly after the White House attempted to rescind DACA in late 2017, questions arose within HUD and among mortgage lenders about whether DACA recipients remained eligible for FHA loans. By summer and fall of 2018, HUD determined that lenders should review loan applicants’ work permits for a code associated with DACA and deny FHA loans to applicants with a DACA-related code,” the letter wrote.

The letter added: “Even after formal guidance on this new policy began circulating within HUD, the public remained unaware of the change and many lenders continued to offer FHA loans to DACA recipients through the summer and fall of 2018. HUD apparently continued to insure the loans in the meantime, though the agency subsequently made representations to lenders indicating their liability for defaulted FHA loans made to DACA recipients. HUD finally publicly stated its prohibition against issuing FHA loans to DACA recipients in June 2019.”

About Author: Mike Albanese

Mike Albanese is a reporter for DS News and MReport. He is a University of Alabama graduate with a degree in journalism and a minor in communications. He has worked for publications—both print and online—covering numerous beats. A Connecticut native, Albanese currently resides in Lewisville.
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