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Evaluation Closure – Federal Housing Administration Residency Requirements

In June 2020, we received letters from members of Congress, including the chairpersons of the House Committee on Financial Services and Oversight and Investigation Subcommittee, expressing concern that the U.S. Department of Housing and Urban Development (HUD) imposed a new, nonpublic, and legally erroneous policy that prohibited issuing Federal Housing Administration (FHA)-insured loans to Deferred Action for Childhood Arrivals (DACA) recipients.  The letters included a concern that HUD had made DACA borrowers ineligible by changing residency requirements within the FHA Single Family Housing Policy Handbook (HUD Handbook 4000.1) in violation of the Administrative Procedures Act.  In response to the letters from Congress, we announced an evaluation with the following objectives in December 2020.

To determine

  1. whether HUD provided lenders with uniform and accurate guidance regarding borrower residency requirements outlined in HUD Handbook 4000.1 and
  2. how HUD oversees residency eligibility requirements for single-family borrowers.

In January 2021, HUD announced that DACA recipients that are legally permitted to work in the United States may apply for FHA-insured mortgages, effective January 19, 2021.  HUD shared its announcement through its FHA INFO email subscription so that FHA-approved lending partners would be aware of the change.  HUD also posted the announcement to its waiver database website.  To prepare to respond to inquiries from the public, HUD updated two Frequently Asked Questions (FAQ) files, and created an additional FAQ file in its FHA Resource Center to reflect the announcement.  HUD plans to update HUD Handbook 4000.1 to reflect the announced eligibility change by approximately April 2021.

As a result of HUD’s policy update, we have closed our evaluation.