Thread: Immigrant loans already reformed

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Immigrant loans already reformed

By Marilyn Kennedy Melia
Special to the Tribune

May 14, 2006

By the thousands, immigrants have come to Chicago, deciding to make it home.

At least a dozen or so Chicago banks are offering mortgages to immigrants so that they can own A home here, says Teresa Lambarry of the Spanish Coalition for Housing in Chicago.

That number might be considered small viewed against the size of the immigrant population. But experts say the market is relatively well served in the Chicago area.

Just a few years ago, immigrants who lacked the standard information that lenders require, such as credit and banking records and a Social Security number, would pay more on a mortgage, says Munai Newash of ACORN Housing, a Chicago housing counseling agency.

Now when immigrants come for help, Lambarry says, "we can tell them about various [loan] programs."

Though the last couple of years have seen mainstream banks serving more immigrants, Lambarry and others think the movement may be stalled over immigration reform.

"Lenders are not cutting back on programs that are existing, but at this point I think others are holding off," Lambarry says.

Indeed, like most things related to immigration, the idea of immigrants obtaining mortgages is not without controversy. Groups in favor of curbing immigration have opposed programs that help immigrants who may be here illegally get a loan. The recent bill passed by the U.S. House, for example, would make it a crime to assist the undocumented in buying a home.

One reason mortgages geared to immigrants are relatively prevalent in the Chicago area is because the Illinois Housing Development Authority (IHDA) introduced an "Opportunity I-Loan," which allows immigrants, as well as others who don't have established credit, to obtain a fixed-rate loan at a rate that's slightly below prevailing market rates.

The I-Loan program, including the Opportunity I-Loan, doesn't use tax dollars. IHDA raises its own funds through bond offerings, says Bryan Zises, IHDA spokesman.

Six firms have completed training on the Opportunity I-Loan and are offering it (lenders are listed at www.ihda.org). Training is needed on how to implement the I-Loan or other mortgages geared to immigrants.

The process of making conventional mortgages has become highly automated, with lenders entering information about a loan request into a computer. The computer provides an answer as to whether the loan is approved and at what interest rate.

Making loans to immigrants harkens back to the days when a committee of savings and loan executives eyeballed an applicant's income and credit and deliberated on whether to make the mortgage, says Mark Doyle, president of Second Federal Savings in Chicago, one of the first institutions to aim at the immigrant market.

It's not a quick and easy process for the immigrant, either. For one thing, before they can get a loan, many lenders require a class or counseling on the finances of home buying.

Every week, about 15 people attend the Spanish language home-buying seminar sponsored by ACORN Housing, Newash says. The counseling is the first step to obtaining a fixed-rate loan that ACORN worked with Citibank to design.

It's likely that recent immigrants don't have credit cards or checking accounts. So lenders ask instead for anything that can represent how faithful the borrower is on his continuing financial obligations, such as cell phone bills.

But gathering such proof can take time, says Newash. "They might live with other family members, and their name isn't on the light bill. So they have to start getting their own."

Not having a Social Security number is another obstacle. Many lending institutions now accept a tax identification number (ITIN) which the IRS issues to immigrants regardless of the status. It can take a couple of months to receive an ITIN, and then some immigrants must take their W2 statements to an accountant who will file past tax returns. Most of the lenders require at least two years of tax returns as well as photo identification for a home loan.

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Funny how easy it is for illegals to get a home loan. I am a single woman in my early thirties, bought my first house last year. I was barely able to qualify for a loan, I had to beg the bank president for the loan, and these guys have special programs set up to help them...