OCC and FDIC guidance highlights potential repayment instability for banks lending to unauthorized workers due to deportation or job loss risks.
U.S. bank regulators warned lenders Monday that loans to undocumented workers may carry elevated credit risks. The Office of the Comptroller of the Currency and Federal Deposit Insurance Corporation cited unreliable income sources and potential deportation as key concerns in nonbinding guidance.
The agencies noted that borrowers without legal work authorization face higher risks of job loss or removal from the U.S., which could disrupt repayment. The guidance aligns with a May executive order targeting financial services misuse by unauthorized residents but stops short of imposing new requirements.
The National Credit Union Association also issued the guidance, emphasizing existing risk management obligations. Industry reactions were muted, as the guidance reiterates longstanding supervisory expectations rather than introducing new rules.