Mortgages for illegal immigrants

Posted by: Dean Foust on July 30, 2007

itin.gifBank of America kicked up a stink when it came to light several months ago that it had been quietly testing a credit card in California that didn’t require an applicant to possess a Social Security number, which was tacit acknowledgement that BofA was marketing the card to illegal immigrants. Now comes a story in The Charlotte Observer that a number of banks (not including BofA, however) are experimenting with mortgages in which the lenders accept Individual Taxpayer Identification Numbers on loan applications in lieu of Social Security numbers. The Observer notes that the IRS issues so-called “ITINs” solely to process tax payments, regardless of immigration status.

These mortgages are starting to take off. The National Association of Hispanic Real Estate Professionals believes that the ITIN mortgage market could reach $80 million, and already Wall Street has begun to buy ITIN loans and bundle them into mortgage-backed securities for sale to pension funds and other institutional investors.

Not surprisingly, the critics are already out, calling for an end to mortage financing for illegal workers. According to the Observer:

Critics, however, insist banks should accept only verified documents that can be obtained by U.S. citizens and legal residents. William Gheen, head of Raleigh-based Americans for Legal Immigration PAC, earlier this year launched a boycott against Bank of America over its credit card program."It's against federal law to induce an illegal alien to enter the U.S. and aid and abet them staying in the country," he said.

In the last session of Congress, a Republican congresswoman from Banner Elk, Rep. Virginia Foxx, introduced a bill that would require federal agencies that insure mortgage loans to check Social Security numbers of applicants. Foxx's spokesman said she opposes the use of ITINs for loans and plans to bring the bill back up again.

I tend to side with the pro-immigrant experts like Tim Ready at the University of Notre Dame, who argues that "It's really important to the economy as a whole and to the real estate market in particular that Latinos be able to purchase a home." You can't have individuals mow your lawns, bus your tables at a restaurant, clean your houses, and not allow them the chance to own their slice of the American dream. Besides, the housing market needs all the help it can get these days.

embracing.gifMy BusinessWeek colleague Brian Grow authored a really insightful cover story ("Embracing Illegals," July 18, 2005) on the conflict between government--who by law must deport illegal workers--and Corporate America, which in their quest for growth, has aggressively been marketing to undocumented workers in recent years (not to mention employing them, but that's another story). You can read Brian's story here.

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Reader Comments

reusha2000

July 30, 2007 07:01 PM

The American people should protest this with their lawmakers on a local,state and federal level.

california girl

July 31, 2007 05:19 PM

I agree with the pro-immigrant expert, except the part where he blanket the entire immigrant population as latinos. There are many Asian immigrants facing such struggles as well, even if majority of illegal immigrants are Latinos.

Anyway, I do think it's fair. The immigrants are willing to pick buckets or fruits for 15 cents each, and doing similar low-paying, below minimum wage jobs American citizens won't do, they should too, get a slice of the American dream pie. I have actually been using 2 brothers who are illegal, but they are the most trust-worthy and skilled workers that I have used. I have employ college kids, people in their 20s, 30s, 40s, 50s, and no one had been as reliable and as independent as these 2 guys. I would love to help them get status in this country. They deserve it! And they deserve health insurance like everyone else.

I know there are economic issues at stake such as the increase costs of supporting these illegal immigrants, etc. However, illegal immigrants have been taken a crucial role in revitalizing my state, California's, economy. I think it's only fair that they get treated with a little more than they currently receive.

Jim D

August 1, 2007 12:45 AM

I wish that when you mean "pro-illegal immigrant", that's what you'd say. It's possible to be very "pro-immigrant" - the ones who wait for years to get a visa, and a green card, and who sacrifice so much, but be "anti-illegal", against the ones who cut in line.

Another sweeping over-generalization happens in the sentence: "It's really important to the economy as a whole and to the real estate market in particular that Latinos be able to purchase a home." Leaving aside whether that's actually true, I find it a little alarming that someone is trying to stop Latinos from buying homes. But that's not what you mean, is it? You mean *illegals*, which are just assumed to be Latino.

And as for the statement: "You can't have individuals mow your lawns, bus your tables..."
I have lots of friends who would like to immigrate to this country, and ones who are already here who'd like a green card. Why should people get to cut in line, just because they mow my lawn?

As for letting folks with no legal ties to the community take out half million dollar loans, does that really seem like sound financial prudence to you?

Chris

August 1, 2007 08:22 AM

Is the "American dream" really going to stay viable if we keep letting in millions of poor, uneducated, low-skill illegal immigrants into the country? The idea of an "American dream" is great, but there's a reason it exists and IS in fact viable, and there's no guarantee that it will be continue to be so - regardless of how much optimism on the topic we are able to muster.

Lord

August 1, 2007 03:36 PM

You have to wonder how many of the recent bad loans are to the undocumented. Not a lot of restraining force against someone like that.

Gabriel

August 15, 2007 07:17 PM

The first question that we should ask is, Who is the owner of this land?, just because our ancestors kill a lot of Native Americans in the past means that we are the right owners of North America?, How many wrongs make a right? I'm sure that you have read some of the history of this country right? It was funded on the basis of genocide and broken "treaties", have you asked a Native American how does he like living in a "reservation"?,the immigration issue is an economy issue, the solution for the immigration problem is to improve the economy of the countries where the people came from, starting with win-win trade treaties between developed countries and third world coutries, one more thing, did you know that in Mexico is not allowed to alliens to buy land? and as a curious thing you go to Baja, Puerto Vallarta,Acapulco, Can-Cun, Ajijic, and other Mexican paradises and many of the best houses are in the hands of US,Canadians,British and German retired people, how is this posible?,the same applies to the most fertile land in Mexico,El Salvador, Honduras, Panama, etc. this land is in the hands of the United Fruit Co. Dole Co, Chiquita Co, etc. Star asking the hard questions to commerce organizations before approve any law in international commerce, while the huge disparities continues the immigration issue will never stop and immigrants will find ways to buy a property.

Jim D

August 15, 2007 11:39 PM

In response to Gabriel:

"Who is the owner of this land?"

The citizens of the United States. You know, Constitution, that sort of thing.

Tatiana Franco

August 20, 2007 11:51 PM

I think that the immigration issue must be overlooked! It's awfull that the government and many others talk so down and bad on how bad illegal immigrants are for the economy. You know what if all the illegal immigrants must leave this nation everysingle person should leave as well. If we are going to talk about being fare; she shall return this entire country to the remaining indians who are the true legal citizens of America. Everyone must leave then.
Does that sound ironic to you or what?

eyes_open

May 17, 2008 09:48 AM

We can't go back in time. The time is now and we have immigration laws. Why should American citizens just shut up and roll over to what amounts to an invasion? It is greed that drives some Americans to make this underground economy of slave labor an option for many poor peoples. The new poor peoples (potential citizens) see this as the "American Way" just to grab what you want or need regardless of the law. Culture is made more crude. We are also deteriorating culturally because it has become a competition between different cultures. If people want to be an American citizen and enjoy all the benefits of this system, I believe they need to follow the laws and assimilate. That means speaking English and adopting the American culture in public - or at least the positive parts - not the rampant GREED displayed so brazenly. Go ahead and celebrate special different cultures in homes and private groups, but be American in society. Otherwise America is just invaded and Americans replaced. I don't want to roll over and give my nation (at least in the current time it is mine) away to strangers. I am appalled at the traitorous actions of Americans who openly and knowingly hire illegal immigrants and at the demands of illegal immigrants for citizenship. Rewarding that paradigm is wrong. That is why I can't vote for either Republicans or Democrats. Both parties serve that idea. For both, it's all about making money and keeping power, certainly not about my best interest as a middle class American.

Libra

May 24, 2008 05:22 PM


I just interviewed a very impressive Latino (from Columbia) with only an ITIN. He is the white-collar professional you describe with a family of four. He has filed all his paperwork but remains in legal limbo - just as you mentioned on your blog -- waiting for his legalization. He was exceptionally honest and wanted to follow all the rules: despite possibly being eligible for sanctuary status, he was unwilling to "jump the line" of immigrants waiting for legalization. As a mortgage broker, I promised I would search for an ITIN mortgage for him. (If any lender programs are still available, please let me know.) As a Florida Realtor I can only hope I'm successful because there are too many homes on the market without buyers who can qualify for a mortgage. As a U.S. Citizen I would be proud to have such a law-abiding individual as my friend and neighbor. The entire immigrant situation is extremely complex. This type of individual could contribute to the solution, rather than the problem.

Arron

September 10, 2008 12:22 PM

Look Americans or whatever you call yourselves, I dont really understand you. These Illigal immigrates are the onces who does the donkey jobs for you and at the end of the day you pay them peanuts and then immigration people throw them in jail cos they dont have some motherfucking papers. To hell with their soo called papers. Without the illigal immigrates you Americans are nobody. Take them as they are, in their countries they are somebodies. Its just because they come to America to make ends meet and the Immigration people put them in jail and treat them like criminals. The impudence.

Abe Lincoln

September 20, 2008 07:47 PM

Real Estate News

http://www.realestatenewsblog.blogspot.com

Comrades, if the U.S. Government continues down the path currently underway, the United States will be much closer to a completely socialist republic than even our friends in Russia. Congress has zero factual basis for considering a complete bank bail out. The special interest dollars are flying around Washington to ensure that you, the taxpayer, bail out private business.

The United States Federal Government is considering a total bank bail out. This action is essentially legal plunder and will strip your liberty from you by increasing the collective national debt. The treatment for this economic event is equal to treating the symptoms of a disease and not the root cause. The root cause of the banking crisis is massive systemic mortgage fraud, money laundering, postal fraud, wire fraud, and tax evasion. The individuals partaking in this fraud are those individuals that do not value their credit because they do not need it long term. In essence, they are short term residents in the United States. The practice continues to happen on a daily, hourly, and minute by minute basis in many of the major cities across the country. Thousands people spread across the country but connected to very tightly knit community groups have taught one another how to commit mortgage fraud and game the banks into loaning money on real estate that is over appraised and valued at prices much higher than a property is truly worth in an arms length transaction (unless there is deceptive mortgage fraud).

The sellers, typically developers, of this real estate are using the transactions to get out of the debt of construction loans. The buyers are using the transactions to obtain "cash back" at the closings that is undisclosed to the banks. Attorneys are helping this process continue. In fact, the typical transaction does not involve a buyers attorney for a very good reason. Appraisers, real estate agents, and other professionals are all playing an active role in making these types of real estate transactions happen. The identification of fraudulent mortgages is so simple for banks to identify within 60 days after the initial transaction. The borrower or mortgagee doesn't even make the first mortgage payment. The purpose of commencing the transaction was for the purpose of obtaining tens of thousands of dollars of cash, not real estate. The real estate is simply a vehicle by which to generate thousands of dollars in "cash back" money at the closing. The cash transaction is completely undisclosed to the banks.

A taxpayer funded bail out of the banks is simply a reward for the absolute worst behavior on behalf of various lending institutions and mortgage brokers. The economy is suffering from massive mortgage fraud and the economic risk is being spread to all taxpayers. Welcome to socialism. Do not let the government fool you. They do not know the root cause of this problem. The door to sub prime lending and option arm categories of loans was created in 1994 during the Clinton administration. The Clinton administration proclaimed that more lower income people and less wealthy residents of the United States should be able "participate in the American Dream". The result of the policy became millions of newly arrived residents with very low incomes could now borrow far in excess of their capability to pay the loans back. When George Bush came into office he publicly noted multiple times that real estate was fueling the economy, it was. However, the price increase s during the period between 2000 and 2006 was because millions of newly arrived buyers were now in the market. Without proper income substantiation and a visa as long as their mortgage term, they should not have been able to borrow. The banks did NOT do their due diligence because government policy did not require them to ensure the borrowers income.

Let me make this simple.

A. Real estate developer builds a building with funds loaned from bank.
B. Developer can't sell due to market forces currently in play, circa 2006.
C. Developer offers to first time home buyer and new resident to the USA thousands of dollars "cash back" at closing or an offer to pay the down payment (this alone constitutes mortgage fraud)
D. Buyer purchases multiple properties at the same time to increase amount of cash in return and to prevent banks from seeing quantity of transactions.
E. Buyer accumulates cash from each transaction and, once received, sends it out of the country.
F. Buyer places tenant in property and collects cash for rents.
G. Buyer only pays homeowner association fees to prevent seizure of property by the association of homeowners.
H. Buyer never makes payment to bank.
I. Buyer either attempts to "short sell" the property to new buyer or they allow the foreclosure to commence. Either way the bank absorbs the loss.
J. Buyer takes all rents, cash back, and and holds it in cash. They do not declare it as income because it's not visible to the IRS.

Meanwhile back at the farm, the U.S. tax payer is being FORCED to pay for the unethical behavior of the borrower and lender. The banks need to be forced to fail. They need to lose their wealth, reputations, and the workers promoting this activity need to lose their jobs. The final result is well deserved. The borrower needs to go to prison and then be deported, if appropriate.

Please contact your Congressman and Senators by urging them to let the banks fail. The trillions of dollars should go toward an increase of FBI investigators in order to prosecute these perpetrators. Congress should also increase postal service investigators. Finally the banks and lending institutions should stop the practice of giving credit to people that do NOT have valid work permits issued from the Department of Homeland Security.

What you have just read is the real story that the mainstream media will not investigate or air. Corporate media and congress would like to blame wall street for actions that are happening in the neighborhoods and high-rises of every major city in the United States of America. Take action now!

robert

April 13, 2009 08:24 PM

This isn't the 60's. Illegals do other job besides picking fruit-higher paying jobs like construction. And if you're going to bring in the Indian argument, check the history-they immigrated from somewhere else too. America was founded on religious freedom-immigrants escaping persecution in their own countries. Yes, there are descent immigrants, but show me a way to conduct background checks that is feasable to find the good ones. I shouldn't have to accept 20 rapist, murderers, and thieves to find one descent family of 5. They suffer through poor wages and abuse because-they are here ILLEGALLY! They are criminals, breaking the law. Reform the system, but don't give me ridiculous arguments and half-truths.

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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.

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