New FHA lending rules give Dreamers path to ‘the American dream’

Homeownership is again within the reach of nearly 641,000 young adults nationwide who benefit from the Deferred Action from Childhood Arrivals program, thanks to a change implemented on Jan. 19 at the Department of Housing and Urban Development. 

The Trump Administration implemented a last-minute change at the Federal Housing Authority to reverse a lending practice many called discriminatory and stated that DACA beneficiaries are eligible for government-backed mortgage loans that are designed to make homeownership affordable and accessible.

“It is a blessing,” said Karina Ruiz, executive director of the Arizona Dream Act Coalition. Ruiz benefits from DACA, a federal program created in 2012 that gives undocumented immigrants who arrived as children a temporary work permit and deferral from deportation. She’s also been a licensed real estate agent since 2016. 

During the Obama years, homebuyers with DACA met the “lawful residency” requirement to be eligible for FHA loans. But that changed under former President Donald Trump. 

In the summer and fall of 2018, FHA officials told lenders that DACA applicants did not meet eligibility for government-backed mortgage loans. Several members of Congress, including Rep. Raúl Grijalva, D-Ariz., said “HUD decided to exclude DACA recipients from FHA loans” and asked for an investigation into the matter.

In Arizona, almost 24,000 people benefit from DACA, according to January data from U.S. Citizenship and Immigration Services, the federal agency that adjudicates immigration benefits. 

Ruiz said she expects more Arizona residents with DACA to begin seeking homeownership. She said after getting their work permit through DACA, many people are able to save some money, build a credit history and be eligible for government mortgage loans within a couple of years. Ruiz said many who get DACA protections strive to buy a home for their parents. 

“It’s like the American dream,” she said. “The economy would pick up if there is immigration reform. A lot of immigrants would want to be homeowners.”

Without FHA loans, homeownership was practically unreachable for the Arizonans who have DACA, said Henry Wade, director of housing counseling services at Chicanos Por La Causa. 

CPLC has a homebuyer education and counseling programs. Wade said opening up the opportunity for thousands of Arizona residents to buy a home is beneficial for the overall community. 

“Having the stability of a home increases so many variables, from access to a capital (to) family stability (to) children (to) self esteem. All these things serve to better the community,” he said. “Having mechanisms for people to purchase a home are critical, and should be considered critical in how we support each other in our country.”

While it’s too early to measure the impact of the HUD policy change, Wade said he anticipates an increase in people interested in buying a home now that the FHA restriction has been lifted.