Can Lenders Ask About Immigration Status? Breaking Down the ATR Executive Order

Risk & Roll Podcast · Episode 10

A new executive order wants lenders to weigh deportation risk in the ability-to-repay analysis. The Risk & Roll panel works through what it actually means, legally, practically, and ethically.

An executive order has directed the CFPB to clarify whether mortgage lenders should consider a borrower's immigration status and potential deportation risk as part of the ability-to-repay determination. The podcast gang dug into what the order actually says, whether it changes anything operationally, and what the real compliance risks are for lenders who take it too seriously or not seriously enough.

Featured voices: Dana Georgiou (Dunmore) · Bob Simpson (Daylight AML) · Ray Snytsheuvel (Loan Risk Advisors) · Greg Oliven (Polygon Research) · Nathan Knottingham (MLO Force, Host)

🎬 Watch the Full Episode This was a great conversation, so be sure not to miss it!

https://www.youtube.com/watch?v=t-BswGdp3UM

What the Executive Order Actually Says

The CFPB's ability-to-repay rule under Reg Z requires lenders to make a reasonable, good-faith determination that a borrower can repay their loan. The executive order directs the CFPB to clarify whether lenders should factor in the possibility that a borrower could lose employment income due to immigration enforcement or deportation.

Ray Snytsheuvel framed the legal landscape clearly: the order cites both Reg Z and Reg B, ability to repay and the equal credit opportunity framework, but doesn't actually change what either regulation says. Reg B already permits consideration of immigration status in limited contexts. ATR already requires assessment of reasonably expected income. The order ties those two things together more explicitly, but the underlying rules haven't moved.

"If we spent a lot of time learning to be objective in everything we do to make credit decisions, this is kind of going against it. We think because we have a license that we can do that, when maybe we shouldn't." — Ray Snytsheuvel, Loan Risk Advisors

Eight ATR Factors and How Immigration Status Fits Into Them

For anyone who hasn't reviewed them recently, the eight ability-to-repay factors under Reg Z are: current or reasonably expected income or assets; employment status; monthly payment on the subject loan; monthly payment on any simultaneous loans; mortgage-related obligations including taxes, insurance, and HOA; current debt obligations, alimony, and child support; debt-to-income ratio and/or residual income; and credit history.

The executive order is effectively nudging lenders toward factors one and two, income and employment status, and asking whether immigration enforcement risk should inform that assessment. Nathan pointed out that factor seven, DTI and residual income, is also implicated: if a borrower's income disappears due to deportation, does the residual income calculation hold?

A Fair Lending Trap

This is where the panel was most direct. Bob put it plainly: if lenders start trying to assess deportation risk, they will inevitably be assessing characteristics like skin color, language, and national origin, all of which Reg B explicitly prohibits as a basis for credit decisions. That's not a hypothetical. It's a foreseeable outcome of asking underwriters to make judgments they're not qualified or legally permitted to make.

Greg noted that Reg B was expanded in 1976 specifically to prohibit discrimination on the basis of national origin. Dana added that if you asked ten loan officers to distinguish between a permanent resident alien, a non-resident alien, and a foreign national, nine of them couldn't do it, which means asking them to layer on immigration enforcement risk assessments is a compliance problem waiting to happen.

"Larry Ellison just laid off a ton of people. Do I have to grade you on your ability to repay because you're in tech? You're a coder; I think you're going to lose your job due to AI. How many marriages end in divorce? Do I have to now ding you because I really don't like the quality and nature of your relationship with your spouse?" - Bob Simpson, DaylightAML

Ray called out the deeper risk: that an order like this, regardless of intent, can function as a license for loan officers who want to discourage applications from certain borrowers. Discouraging applications is itself an ECOA violation. The concern isn't just that bad actors will misuse it; it's that normalizing the question creates conditions where that misuse becomes easier to rationalize.

Bob's Monday Morning Test

Bob Simpson offered what may be the most practical framing of the episode: after reading an executive order or regulatory guidance, can you identify a single instruction you'd give your team differently on Monday morning? In this case, his answer was no.

His broader point was that lenders already face ATR risk from a wide range of unpredictable life events, including job loss, divorce, illness, and industry disruption from AI, and the statistical probability of any given borrower being deported is lower than most of those. Grading a loan differently on the basis of deportation risk, while ignoring comparably probable income disruptions, isn't a defensible underwriting position.

What This Means in Practice for Private and Non-QM Lenders

Dana noted that in private lending, where Dunmore operates, ITIN borrowers and foreign nationals are common and underwriting is asset-based rather than income-based. The property qualifies the loan, not the borrower's W-2. That structure sidesteps much of this debate by design, though lenders in that space still assess borrower status as part of overall risk management.

Greg connected the conversation to the broader non-QM picture: loans to borrowers without traditional documentation or citizenship status are generally classified as non-QM, and that segment has been growing steadily in the HMDA data. A regulatory environment that discourages those loans, or makes lenders overly conservative about originating them, has real market consequences.

A Constitutional Bookend

Greg closed the episode with a point worth noting. The Fifth and Fourteenth Amendments both explicitly protect life, liberty, and property, and both use the phrase "any person," not "any citizen." The due process protections in the Constitution aren't limited to citizens. That doesn't resolve the ATR question, but it sets the backdrop against which immigration-based lending restrictions have to be evaluated.

He also noted that 19 current members of Congress were not born as U.S. citizens, a reminder that immigration and citizenship have always been part of the fabric of American civic and economic life.

"Today we have 19 people in Congress who were not born citizens of the United States. It's just part of the fabric of who we are." — Greg Oliven, Polygon Research

Key Takeaways

• The executive order reframes existing rules under Reg Z and Reg B, but adds no new legal requirement.

• Lenders who try to assess deportation risk in underwriting will almost certainly run into fair lending violations in the process.

• Discouraging loan applications based on perceived immigration status is an ECOA violation, regardless of intent.

• The statistical probability of deportation for any given borrower is lower than many other income disruption risks lenders already absorb without special guidance.

• Loan officers are not equipped, legally or practically, to assess immigration status nuance. Adding that expectation without training and guardrails creates liability.

• Private and asset-based lenders are largely insulated from this debate by the structure of their underwriting.

• The practical answer for most shops: continue originating good loans to qualified borrowers. No new Monday morning instructions required.

  
  

Risk & Roll covers mortgage compliance, risk, and industry strategy every episode. Subscribe wherever you listen, and leave your feedback in the comments or at support@mloforce.com.

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