Trump Administration Issues Banking Guidance Warning Against Lending to Undocumented Immigrants

On July 13, 2026, federal banking regulators issued joint guidance warning financial institutions that lending to undocumented immigrants presents elevated credit risks due to potential deportation or loss of employment. Implementing a May 2026 executive order by President Donald Trump, the nonbinding guidance reminds banks of existing risk-management duties. Critics warn the move could raise compliance costs, discourage bank usage among legal immigrants, and push funds into unregulated channels.

Federal banking guidance undocumented immigrants

• ▪On July 13, 2026, the Office of the Comptroller of the Currency, the Federal Deposit Insurance Corporation, and the National Credit Union Administration issued joint banking guidance
• ▪The joint guidance warns that borrowers without U.S. work authorization present elevated credit risk due to potential deportation or loss of employment
• ▪The joint guidance is nonbinding and does not impose new rules, but reminds financial institutions of existing risk-management obligations

Trump financial system executive order

• ▪In May 2026, the Financial Crimes Enforcement Network issued an advisory instructing banks to watch for red flags tied to unauthorized employment
• ▪The joint guidance implements President Donald Trump's May 2026 executive order aimed at restricting undocumented immigrants' access to the U.S. financial system
• ▪President Donald Trump's May 2026 executive order instructed the Treasury Department and financial regulators to develop tougher due diligence rules for verifying customer identity
• ▪In June 2026, the Consumer Financial Protection Bureau issued guidance warning financial institutions about credit risks associated with lending to unauthorized workers

Credit risk assessment requirements

• ▪The joint guidance suggests that financial institutions consider requiring customers to provide evidence of continuing work authorization
• ▪The joint guidance directs banks to monitor lending concentrations in geographic markets, employers, or industries disproportionately affected by immigration enforcement
• ▪The joint guidance advises financial institutions to assess a borrower's willingness and capacity to repay through safe and sound underwriting practices

ITIN mortgage lending data

• ▪In 2023, there were approximately 4.6 million total mortgage originations in the United States
• ▪The Urban Institute estimated that between 5,000 and 6,000 mortgages were made in 2023 using an Individual Tax Identification Number
• ▪Data on undocumented immigrants' access to loans is limited because banks are not required to collect citizenship information from customers

Compliance costs chilling effects

• ▪Critics warn that the guidance may push money outside the regulated banking system, potentially increasing the risk of fraud and abuse
• ▪Critics argue the federal guidance could increase compliance costs for banks and discourage bank usage, even among immigrants with work authorization