Mortgages for illegal immigrants

Posted by: Dean Foust on July 30

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.

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BusinessWeek editors Peter Coy, Dean Foust, Chris Palmeri and Prashant Gopal 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. Hot Property was a finalist for "Best Media-Affiliated Business Blog" in the 2007 EPpy Awards, presented by Editor & Publisher and Mediaweek, and was named among the 25 most influential real estate blogs of 2007 by Inman News.

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