Photo courtesy of advisoryexcellence.com

By David L. Snelling

MIAMI – The President Donald Trump administration is warning banks and credit unions to use precaution when deciding to grant loans to undocumented immigrants who might be facing deportation.

Some people living in the U.S. are at risk of losing their jobs when their work permits expire tied to their visas and the end of Temporary Protection Status (TPS), and that financial institutions could suffer huge losses if immigrants default on their loans.

Trump’s sweeping anti-immigration laws are making it difficult for illegal aliens from countries like Haiti, Syria, Venezuela and others to continue living and working in the U.S.

TPS holders, including Haitians, face deportation following the U.S. Supreme Court ruling allowing Trump to end their stay in the U.S. and deport them to their home countries if they refuse to voluntarily leave.

TPS were granted by the President Obama and Biden administrations to migrants who fled their home countries due to an earthquake, deadly violence and political upheaval.

The federal government can’t enact laws to ban banks and credit unions from granting loans to undocumented immigrants, but Trump signed an executive order in May 2026, for federal agencies to crackdown on banking services and loans provided to individuals living in the country without work authorization.

The administration stated that the order is designed to combat national security threats and financial fraud, specifically pointing to cross-border money laundering, drug cartel operations, and human trafficking networks.

Now, with hundreds of thousands of illegal aliens in the U.S. set to self deport or forced to return to their home countries starting July 24, 2026, the Trump administration has issued a warning to financial institutions to scrutinize loan applications and legal status before making any decisions.

Some banks and other financial institutions are already at risk of losing billions of dollars by lending money to undocumented immigrants who were ordered to self deport, defaulting on their loans.

The guidance also says that financial institutions “might consider” requiring customers to provide “evidence of continuing work authorization,” among other documentation, as part of their assessment of a customer’s ability to repay a loan.

It also directs banks to be on alert to lending that’s concentrated in “geographic markets, employers or industries” that may be “disproportionately affected” by the Trump administration’s stepped-up immigration enforcement.

The guidance was issued jointly by the Office of the Comptroller of the Currency, the Federal Deposit Insurance Corporation and the National Credit Union Administration.
“Lending to individuals who are not legally authorized to work in the United States may present elevated credit risk because a borrower’s ability to generate income, maintain employment, and remain financially stable may be subject to greater uncertainty,” the Office of the Comptroller of the Currency said in a press release.”

While precise figures are unavailable due to limited immigration-loan data, the Office of the Comptroller of the Currency said a reasonable upper estimate suggests that U.S banks could face a loss of over $5 billion in defaults on loans to immigrants if they are deported.

The actual financial impact would be smaller if banks adapt via risk management, collateral recovery, or loan restructuring.

Assuming mortgages are about one-third of loans held by unauthorized immigrants in 2023, the total number of loans to these individuals is likely in the tens of thousands nationally, with substantial concentration in certain states including Florida, California, Texas and New York.

Whether local financial institutions heed the president’s advice is unknown.

Miami Dade County Federal Credit Union and Broward HealthCare Federal Credit Union didn’t respond to media inquiries for an interview.

According to their websites, both credit unions don’t mention if undocumented immigrants or people with visas are their clients.

DCFCU offers a range of loan products including auto loans, personal loans, home equity loans and lines of credit and quick cash loans and other lending money for other financial issues.

Some undocumented immigrants who were turned down for loans by big banks sought credit unions and community financial institutions with loosen requirements.

According to Factually, an AI-powered research tool, some credit unions and local community banks allow noncitizen borrowers, including undocumented immigrants, to open accounts or obtain loans using an Individual Taxpayer Identification Number (ITIN) instead of a Social Security Number.

These institutions may accept tax returns, bank statements, or other documentation to verify income and evaluate creditworthiness.

The approach helps immigrants access financial services even without legal work authorization or a U.S. Social Security Number.

Availability depends on local credit union policies and community lender initiatives.

Not all regions have credit unions that accept ITIN holders or undocumented individuals.

Loans through ITIN programs often require a higher down payment, higher interest rates, or stricter underwriting standards compared to conventional loans

Nonprofit and CDFI Alternatives: Some non-profit Community Development Financial Institutions (CDFIs), such as New American Lending, specifically target underserved communities, including refugees and immigrants

According to the American Bankers Association, federal agencies like the National Credit Union Administration (NCUA), FDIC, and Consumer Financial Protection Bureau (CFPB) provide guidance to ensure that financial institutions do not use immigration status as unlawful discrimination in credit decisions.

However, the guidelines do not guarantee credit access; institutions may still consider employment authorization and income stability when evaluating loan applications.