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The governor of Illinois, Rod Blagojevich, recently unveiled a proposal that garnered controversy almost before he even finished his speech: He wants to create a new state-backed mortgage loan program that is intended to make home ownership more accessible to first-time buyers — regardless of immigration status (Wisconsin already has such a program). The program, as described in this Chicago Tribune article (registration may be required), simply requires borrowers to have lived in Illinois and filed tax returns for at least two years, according to the Trib. The program would make loans for up to 97% of property value if the borrow makes a downpayment for the remaining 3%.
Is this a good idea? I’m on the fence. I’m generally a supporter of programs for first-time buyers, and the studies I’ve seen suggest that immigrants — documented or undocumented — are pretty good credit risks, or at least better than the critics believe. But there are already a number of federal programs for first-time buyers, and some major lenders like Bank of America already have some pretty good programs in place to cater to immigrants, including programs that count the collective income not just of a single borrower or married couple, but for all family members of a single household (a recognition that many new immigrants share a home as an extended family). I worry that a state program like this won’t be well-run and given the minimal downpayment at a time when property values are sliding, is a recipe for a taxpayer bailout sometime down the road.
I know the governor is going to take a lot of heat from groups that don’t believe undocumented immigrants deserve the same privileges as U.S. citizens, as witnessed by this posting on another blog. And it isn’t just the bloggers; Illinois Sen. Bill Brady said he’s going to introduce legislation that would prevent any citizen-financed program that supports mortgages for illegal immigrants in Illinois.
Not sure I can agree with the poster nor Brady; I think the new immigrants contribute probably as much to society as they’re taking out in services. What do the other readers here think?
BusinessWeek editors Chris Palmeri, Prashant Gopal and Peter Coy chronicle the highs and lows of the housing and mortgage markets on their Hot Property blog. In print and online, the Hot Property team first wrote about the potential downside of lenders pushing riskier, "option ARM" mortgages and the rise in mortgage fraud back in 2005—well ahead of many other media outlets. In 2008, Hot Property bloggers finished #1 in a ranking of the world's top 100 "most powerful property people" by the British real estate website Global edge. Hot Property was named among the 25 most influential real estate blogs of 2007 by Inman News.