HUD Doesn’t Track Citizenship for FHA Loans, Despite New Policy Restrictions

The Federal Housing Administration (FHA) does not currently track the citizenship or residency status of mortgage applicants, according to a recent response to a Freedom of Information Act request. This means the agency holds no data on how many non-permanent residents, including those on H-1B visas, have received FHA-insured mortgages in the past.

Lack of Data Raises Questions

The response, provided to The Dallas Express, detailed a search conducted by staff within HUD’s Office of Single Family, Denver Homeownership centre, which found no relevant documents regarding the distribution of FHA benefits by H-1B visa holders or internal discussions about potential exposure related to loans held by non-permanent residents.

Did You Know? The FHA was established in 1934 as part of the National Housing Act, designed to increase home construction and reduce unemployment during the Great Depression.

Policy Shift and Enforcement Concerns

While the FHA doesn’t collect this data, a standard Uniform Residential Loan Application used in conventional lending does include a section for citizenship disclosure. However, HUD’s addendum to this application for FHA-insured loans omits this section. A recent policy change, announced in Mortgagee Letter 2025-09, stipulates that non-permanent residents will no longer be eligible for FHA-insured mortgages, reserving these benefits for those with lawful permanent resident status.

The agency’s response did not clarify how this new policy will be enforced given the lack of data collection on borrower residency status. When pressed, a HUD official stated the agency’s focus remains on delivering safe, affordable housing for American citizens.

Parallels with USCIS Data Collection

This lack of tracking mirrors a similar situation at U.S. Citizenship and Immigration Services (USCIS). USCIS has also disclosed that it does not track data on H-1B awardees who obtained degrees from certain institutions, specifically Manav Bharti University, which has been accused of selling fake diplomas. A 2008 audit of the H-1B visa programme revealed that over 13% of approved visas contained fraudulent material.

Expert Insight: The absence of systematic data collection on residency status within the FHA programme, coupled with similar gaps at USCIS, suggests a potential challenge in fully assessing and managing risks associated with federal benefits programmes.

The H-1B visa programme, created in 1990, allows companies and universities to hire foreign workers in specialized fields. Currently, 72% of H-1B visas are awarded to workers from India, and 12% to those from China.

Frequently Asked Questions

Does the FHA currently collect citizenship data on loan applicants?

No, according to a recent Freedom of Information Act response, the FHA does not collect citizenship or residency data on loan applications.

When did the FHA change its policy regarding non-permanent residents?

Mortgagee Letter 2025-09, announced in March 2025, stated that non-permanent residents would no longer be eligible for FHA-insured mortgages.

What did the USCIS audit reveal about H-1B visa applications?

A 2008 USCIS compliance audit found that over 13% of approved H-1B visas included fraudulent material.

As the FHA implements its new policy, it remains to be seen how effectively it will be enforced without collecting data on borrower residency status. The agency could potentially rely more heavily on lenders to verify this information, or it may face challenges in ensuring compliance. Further scrutiny of the H-1B visa programme in Texas, and nationally, is also likely to continue.

How might the lack of data collection impact the FHA’s ability to assess risk and ensure the long-term stability of its loan portfolio?