Risk and compliance

Default and foreclosure

Also called default, foreclosure.

Default is the project borrower failing to meet its obligations to a lender, and foreclosure is that lender taking the pledged collateral, which in the usual regional center loan structure can leave EB-5 capital, ranking behind the senior lender, with nothing left to recover.

What it decides

In the loan model the new commercial enterprise lends pooled EB-5 money to a job creating entity that already owes a senior construction or acquisition lender. If the borrower defaults and the senior lender forecloses, the senior claim is satisfied from the collateral first, and a subordinated EB-5 loan or an equity position can recover nothing. Neither word is defined by immigration law, and losing money is not by itself disqualifying: 8 CFR 204.6(j)(2) asks only that the capital was placed at risk for the purpose of generating a return, and USCIS reads at risk to mean a risk of loss and a chance for gain. At removal of conditions 8 CFR 216.6(a)(4)(iii) asks whether the investment was sustained and (a)(4)(iv) whether ten full-time jobs were created or can be expected within a reasonable time. Losing the money and keeping the green card are both possible at once. So is the reverse: capital repaid early defeats the petition even where the project prospers.

Governed by 8 CFR 204.6(j)(2) for capital placed at risk for the purpose of generating a return; 6 USCIS-PM G.2(A)(2), Immigrant Petition Eligibility Requirements, last revised by the policy alert of 26 October 2023, for the rule that there must be a risk of loss and a chance for gain; 8 CFR 216.6(a)(4)(iii) for sustainment and (a)(4)(iv) for job creation. Default and foreclosure are lending terms: no EB-5 statute, regulation or Policy Manual chapter defines either, so the sources above are good for the immigration consequence and say nothing about the lending mechanics, which come from the loan and intercreditor documents.

Where this is explained properly

Pages here that go into default and foreclosure rather than mentioning it.

Conducting Due Diligence on EB-5 Projects: A Beginner’s Guide

Related terms

Loan modelThe loan model is the regional center structure in which the new commercial enterprise lends the pooled investor capital to a separate job creating entity, most often a company the project developer controls, instead of taking an ownership stake in it.
Senior debtSenior debt is the borrowing that ranks first in a project's capital stack, normally secured by a first lien on the project assets, and it is paid ahead of every junior claim, an EB-5 loan included, out of project cash flow and out of the collateral if the borrower defaults.
Capital stackThe capital stack is the ranking of a project's funding sources by priority of claim, from senior debt, which is paid first and absorbs losses last, down through mezzanine debt and preferred equity to common equity, which is paid last and absorbs the first losses. It is a finance term rather than an EB-5 one: nothing in the EB-5 statute or regulations fixes where a project's EB-5 money must rank.
Subordination and intercreditor agreementA subordination agreement ranks one creditor's claim behind another's, and an intercreditor agreement sets the order of repayment, control and enforcement rights among two or more lenders to the same project. Neither is an EB-5 instrument. Both turn up in EB-5 because the new commercial enterprise's loan is usually the junior debt in the capital stack.
Bankruptcy of the projectBankruptcy of the project is the failure of the business holding or using the EB-5 capital, which ends the investment but does not by itself end the immigration case, because removal of conditions turns on what already happened to the capital and to the jobs.

Checked against primary sources on 10 August 2026. Back to the glossary