HUD Waives Lawful Residency Requirement for FHA Insurance

On January 19, 2021, in a move that will significantly impact the eligibility of DACA recipients for FHA insurance, HUD Deputy Secretary Brian Montgomery authorized the removal of a provision of the FHA Single Family Housing Handbook 4000.1 which states that non-U.S. citizens without lawful residency in the U.S. are not eligible for FHA-insured mortgage loans.

Mr. Montgomery stated that the inclusion of the “lawful residency” requirement in FHA guidelines predated President Obama’s 2012 DACA Executive Order, and did not anticipate a scenario where an applicant might not have entered the U.S. legally, but could still be considered lawfully present in the U.S. (for example, a DACA recipient).

This waiver represents an apparent shift away from HUD’s stated position in 2019 that because DACA recipients do not have “lawful status,” the lawful residency requirement made them ineligible to receive FHA-insured loans.