Mortgage

Prominent Senate Democrats want reversal of HUD policy on FHA mortgages for Dreamers

Democrats move to guarantee government will back DACA mortgages

A number of prominent Senate Democrats, including several who are running for president, want the Department of Housing and Urban Development to reverse its new policy of the Federal Housing Administration refusing to back mortgages for Deferred Action for Childhood Arrivals recipients.

And the Senators want to make sure that other government-backed loans are available to DACA recipients (also called Dreamers) as well.

This week, a dozen Democrats introduced the “Homeownership for Dreamers Act,” which would ensure that Dreamers cannot be denied a mortgage backed by the FHA, Fannie Mae, Freddie Mac, or the Department of Agriculture based solely on their immigration status.

A companion bill was passed out of the House Financial Services Committee last week after being introduced in the House of Representatives by Rep. Juan Vargas, D-CA.

The Senate version of the bill was introduced this week by Sens. Kamala Harris, D-CA; Cory Booker, D-NJ; Amy Klobuchar, D-MN; Kirsten Gillibrand, D-NY; Bernie Sanders, I-VT; Robert Menendez, D-NJ; Catherine Cortez Masto, D-NV; Sherrod Brown, D-OH; Mazie Hirono, D-HI; Ron Wyden, D-OR; Richard Blumenthal, D-CT; and Tammy Duckworth, D-IL.

The bill comes about after HUD Assistant Secretary for Congressional and Intergovernmental Relations Len Wolfson stated definitively last week that Dreamers are not eligible for FHA mortgages, a move that was a reversal from HUD’s previous answers to questions about whether FHA is backing mortgages for Dreamers.

In fact, HUD told HousingWire earlier this year that its policies surrounding DACA borrowers had not changed, despite ongoing confusion in the mortgage industry about whether the FHA would back mortgages for Dreamers.

As Dani Hernandez previously detailed for HousingWire, DACA recipients were once eligible for FHA backing under specific circumstances, but that was a different time.

In September 2018, Hernandez wrote that HUD had begun quietly denying FHA mortgage insurance to Dreamers. Both Hernandez and Buzzfeed wrote that HUD personnel have told some lenders that Dreamers are no longer eligible for FHA mortgages.

Additionally, numerous lenders later told HousingWire that they had also been told directly by a HUD representative that DACA recipients are not eligible.

HousingWire subsequently investigated and found a dozen different lender bulletins and guidelines that each stated that Dreamers are ineligible for FHA financing.

And earlier this year, in response to a question during a Congressional hearing, HUD Secretary Ben Carson said that HUD’s policies on FHA loans for Dreamers had not changed.

But the official word from HUD changed last week when Wolfson said in a letter to Rep. Pete Aguilar, D-CA: “because DACA does not confer lawful status, DACA recipients remain ineligible for FHA loans.”

And that is now leading to Democrats moving in both the House and Senate to ensure Dreamers can get a mortgage backed not only by the FHA, but also by Fannie, Freddie and the USDA.

Earlier this year, Fannie Mae declared that it supports (and will continue to support) mortgages for DACA recipients, but the legislation would codify that support into law.

“There is no legitimate reason for the Trump Administration to deny FHA-backed mortgages to Dreamers who worked so hard to secure protected status under DACA and who continue to contribute so much to the country they call home,” Menendez said in a statement.

“It’s clear that this Administration, hamstrung by federal rulings that have prevented the mass deportation of DACA recipients, is now actively weaponizing the Department of Housing and Urban Development to carry out its bigoted anti-immigrant agenda,” Menendez continued. “The Homeownership for Dreamers Act will prohibit for the federal government from discriminating against DACA recipients when applying for government-backed mortgage loans and in doing so ensure DACA recipients can continue to pursue the American dream of homeownership.”

Booker agrees.

“Discriminating against Dreamers is an affront to the values we hold dear in America. These young people, who came to the United States as kids and call this country home, should not be barred from buying a home and pursuing the American dream, Booker said. “This legislation would prevent the Trump Administration from punishing DREAMers and denying them the opportunity to become homeowners.”

Cortez Masto added: “For many young Nevadans, homeownership represents a crucial step in securing their financial futures. It’s unacceptable that this Administration continues to target the 13,000 Dreamers in Nevada, and thousands more nationally, by denying them housing loans simply because of their immigration status. I’m proud to cosponsor legislation that protects Dreamers’ eligibility to buy homes, invest in their futures and pursue the American dream.”

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