On July 13, 2026, the Federal Deposit Insurance Corporation (FDIC), Office of the Comptroller of the Currency (OCC), and National Credit Union Administration (NCUA) issued interagency guidance reminding the financial institutions they supervise of their existing safety and soundness obligations when extending credit to individuals who are not legally authorized to work in the United States. So far, no such guidance has issued from the Federal Reserve Board.
The guidance implements President Trump’s Executive Order 14406, Restoring Integrity to America’s Financial System, issued on May 19. That Executive Order directed the federal banking agencies to address risks to the financial system associated with extending credit and financial services to individuals who are “inadmissible” or “removable” under the immigration laws. (“Inadmissible” refers to individuals ineligible to enter the United States or ineligible to receive or renew visas and “removable” refers to individuals who may be legally deported.)
Although the guidance does not establish new legal requirements, it signals how certain federal bank regulators expect supervised institutions to evaluate and manage the credit risks associated with lending to borrowers whose ability to remain lawfully employed in the United States may be uncertain. The guidance follows closely on the Consumer Financial Protection Bureau’s June 8, 2026 Statement on Ability to Repay and Immigration Status which addressed the relevance of immigration status under the Truth in Lending Act ability to repay requirements for credit cards and mortgage loans and the Equal Credit Opportunity Act.
Existing Safety and Soundness Standards Apply
The agencies emphasize that the guidance is intended as a reminder of existing supervisory expectations rather than the creation of new underwriting standards. Financial institutions are expected to continue employing safe and sound underwriting practices that evaluate a borrower’s willingness and capacity to repay a loan according to its terms.
The agencies note that borrowers who are not legally authorized to work in the United States may present elevated credit risk because their ability to generate income, maintain employment, and remain financially stable may be subject to greater uncertainty. Accordingly, institutions should consider whether those uncertainties affect repayment capacity and other traditional underwriting factors.
Key Underwriting Considerations
The guidance identifies several areas that institutions should evaluate when underwriting loans to borrowers who are not authorized to work in the United States (so called “non-work authorized borrowers”).
Source of repayment. Because employment income is often the primary source of repayment, institutions should assess whether that income is stable and likely to continue. The agencies specifically identify several risks that may impair repayment, including:
- termination of employment because the borrower lacks legal work authorization;
- expiration of employment authorization;
- inability to obtain lawful reemployment; and
- removal from the United States.
The agencies encourage lenders to consider whether repayment capacity would remain adequate under scenarios involving interruptions in employment or income.
Collateral considerations. The guidance notes that lenders may encounter additional challenges enforcing security interests if non-work authorized borrowers become difficult to contact or locate or leave the United States. These concerns may be particularly relevant for movable collateral such as automobiles, recreational vehicles, and boats.
Documentation and verification. Institutions are encouraged to verify that employment income is current, stable, and likely to continue by reviewing documentation such as pay stubs, W-2s, tax returns, employer verifications, bank statements, and, where appropriate, evidence of continuing work authorization. The agencies also remind institutions to consider whether loans to non-work authorized borrowers warrant particular attention for credit classification and allowance for credit loss purposes.
Portfolio concentration risk. The agencies also focus on portfolio-level risk. Institutions with significant concentrations of borrowers employed in industries, geographic areas, or by employers that may be disproportionately affected by immigration enforcement or workforce disruptions should evaluate whether correlated deterioration could occur across multiple borrowers simultaneously.
Consumer Compliance Considerations
The guidance also highlights the CFPB’s June 8, 2026 Statement on Ability to Repay and Immigration Status.
The CFPB explained that under the Truth in Lending Act and Regulation Z, mortgage lenders and credit card issuers must make a reasonable and good-faith determination that consumers have the ability to repay their loans. Where repayment depends upon U.S.-based employment, creditors are allowed to, and in some circumstances may be required to, consider information bearing on the consumer’s continuing ability to earn that income.
The guidance also notes that ECOA and Regulation B expressly permit creditors to consider an applicant’s immigration status, as well as additional information necessary to determine the creditor’s rights and remedies regarding repayment. Thus, the agencies make clear that consideration of immigration status, when relevant to credit risk and repayment, is consistent with existing federal law.
As is the case with CFPB statement, the federal banking agencies’ guidance does not provide detail on how financial institutions can thread the needle of complying with safety and soundness, ability to repay and fair lending requirements. The guidance also appears to be at odds with the Trump Administration’s opposition to the debanking of individuals or businesses.
Takeaways
The guidance and FIL reflect the Trump Administration’s broader policy emphasis on incorporating immigration-related considerations into federal financial regulation. While they impose no new regulatory requirements, they clearly signal that the FDIC, OCC, and NCUA expect supervised institutions to consider whether a borrower’s lack of work authorization affects traditional credit risk factors, including income stability, repayment capacity, collateral recovery, and portfolio concentrations.
Banks, credit unions, and other supervised institutions should review their underwriting policies, documentation practices, concentration risk monitoring, and loss allowance methodologies to ensure they appropriately account for these risks where relevant, particularly for residential mortgage lending.
Although much of the guidance restates existing safety and soundness principles, the issuance of the guidance demonstrates that immigration-related credit risk has become an area of heightened supervisory focus. Financial institutions should therefore expect FDIC, OCC, and NCUA examiners to evaluate how these risks are incorporated into underwriting and risk management practices during future examinations.
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