Thread: Mortgages for illegal immigrants

Posted on Sun, Jul. 29, 2007
Mortgages for illegal immigrants
RICK ROTHACKER
As part of an effort to tap a burgeoning Hispanic market, banks are increasingly experimenting with mortgage loans that can be obtained by illegal immigrants.
A growing number of financial institutions, including some in the Carolinas, are accepting Individual Taxpayer Identification Numbers on loan applications in lieu of Social Security numbers. The IRS issues so-called "ITINs" solely to process tax payments, regardless of immigration status.

The loans, which represent a fraction of the more than $2 trillion annual mortgage market, are legal. Banks are required to verify the identity of their customers for anti-terrorism and money-laundering purposes but don't have to check immigration status.

Mortgages are part of a broader push by banks to appeal to a Hispanic demographic, including immigrants and U.S. citizens, that is growing faster than the general population and has a lower homeownership rate. Banks and Hispanic community advocates say underserved Latinos deserve a chance at the American dream and financial stability. There's also big business at stake as much of the mortgage market slumps.

Critics say lenders are encouraging illegal immigration and helping lawbreakers stay in the United States. Earlier this year, they leveled the same criticism at Charlotte-based Bank of America Corp. for testing a credit card in Los Angeles that can be obtained by individuals without Social Security numbers.

The loans highlight the dual treatment of Hispanic immigrants in the U.S. While border patrols look to stop them from entering the country, businesses covet them as customers and the IRS issues them numbers to pay taxes. Legislation designed to ease this tension failed in the Senate last month, amid complaints the bill would provide amnesty to immigrants who had violated U.S. laws.

There's no indications banks are breaking the law, but the loans are "problematic" because they "facilitate the illegal presence of individuals in this country," said Homeland Security spokesman Russ Knocke. "What it underscores is the need for comprehensive immigration reform," he said.

Banks embrace ITIN

ITIN mortgages began over the past few years with small community banks and credit unions, but bigger banks are now eyeing the market. Wells Fargo & Co. and Citigroup Inc. have pilot programs under way, and JPMorgan Chase & Co. is considering one.In the Carolinas, smaller institutions such as Banco de la Gente, the Latino Community Credit Union and Citizens Home Loan Inc. accept ITINs. Wachovia Corp. and BB&T Corp. take them in limited cases from customers allowed to be in the U.S. Banks that do not accept them include Bank of America, SunTrust Banks Inc., RBC Centura and First Charter Corp.

A sign of the market's growth came late last year when the Hispanic National Mortgage Association began a joint venture with Deutsche Bank to buy ITIN and other mortgages from the lenders that originate them. HNMA Funding packages the loans into securities for investors.

Such a secondary market helps lenders spread their risk, gain capital to make more loans and offer better rates to borrowers. In the recent meltdown in the mortgage market for borrowers with spotty credit, however, Wall Street investors have faced blame for spurring riskier loans.

The new venture provides automated underwriting services designed to help lenders analyze Hispanic borrowers with nontraditional or skimpy credit histories. So far, HNMA Funding has acquired more than $100 million in loans, chief executive Leonardo Simpser said.

The ITIN mortgage market has only generated about $2 billion in loans overall, but it's growing, Simpser said. "Originations have been accelerating," he said, "and more and more players are in the market."

Hispanic boom

For years, banks have strived to attract Hispanic customers to boost a slow-growth business.

Looking to sell checking accounts, money transfer services and now loans, they've hired bilingual tellers, partnered with community groups and translated brochures into Spanish. Bank of America and BB&T even sponsor a Spanish mini-series called "Nuestro Barrio" that offers lessons about banking, homeownership and other life skills. In the Charlotte area, the Hispanic population was about 112,637 people in 2005, or about 8 percent of the total. Latinos, though, accounted for only 2 percent of single-family home owners, according to 2000 census data, the latest available.

"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," said Tim Ready, director of research at the University of Notre Dame's Institute for Latino Studies, which issued a report last month on Hispanic housing, including the use of ITINs.

Hispanic immigrants, however, face a number of challenges when buying homes, experts said. Many Latinos are wary of accumulating debt, which means they're not building a credit history. They have to overcome an ingrained distrust of financial institutions and can struggle making complex financial transactions in English.

Immigration status is another issue. About 53 percent of Hispanic households are headed by individuals not born in this country, according to the Institute for Latino Studies. The Pew Hispanic Center has estimated there are as many as 12 million unauthorized immigrants in the U.S. -- about 390,000 in North Carolina and 55,000 in South Carolina.

Enter the ITIN, which allows banks to meet requirements that they check their customers' identities and collect an ID number.

The IRS issues ITINs to individuals required to file a tax return but who can't obtain a Social Security number. These may be used by visa holders legally in the U.S. or spouses of U.S. citizens, but they also can be obtained by illegal immigrants. The IRS issued a total of 10.8 million ITINs from 1996 to 2006.

The National Association of Hispanic Real Estate Professionals estimates the potential ITIN mortgage market has grown to $80 billion from $44 billion just two years ago. Tim Sandos, the organization's chief executive, argues that these individuals deserve a chance to buy a home because they have declared themselves to the government, and, in many cases, have begun the lengthy process of earning permanent residence status or U.S. citizenship.

The opposition

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.

Meanwhile, banks that accept ITINs say the loans have performed well. The Hispanic National Mortgage Association said less than 1 percent of the loans it has acquired are delinquent. In the $20 million-plus mortgage portfolio at Durham-based Latino Community Credit Union, only one borrower facing a personal crisis is delinquent, chief executive Luis Pastor said.

"These are people," he said, "who want to invest long-term in their homes and build neighborhoods."

Attractive Demographics

48 Percent of Hispanic households own homes, compared to 67 percent for the general population.

• The Latino population is expanding faster than other ethnic groups, accounting for almost half of the nation's 2.9 million in population growth in the year ended July 2006.

Source: U.S. Census, Institute for Latino Studies at the University of Notre Dame.

Bank of America's Mortgage Stance

Bank of America, which has faced criticism for testing a credit card that doesn't require a Social Security number, has decided not to use Individual Taxpayer Identification Numbers for mortgages for "safety and soundness" reasons, said Glenda Gabriel, neighborhood lending executive.Still, she said the credit card, which requires a bank account and has a $500 limit, fits the bank's strategy of aiding customers in building a credit history to enter the financial mainstream.

"If you can help someone get a checking account established, their credit (established), that certainly helps them at a later point in time to apply for a mortgage," said Gabriel, who wouldn't rule out accepting ITINs in the future.

Like a number of other banks, Bank of America works with Hispanic community groups and offers alternative ways to check credit histories. This includes examining utility and rent payments.

Among the bank's customers are Ena Perez and her husband, Adan. Both of their parents were immigrants, but they are U.S. citizens. They took out a Bank of America mortgage after going through a counseling session and receiving a grant from a neighborhood development program that allowed them to pay off medical debts.

The couple, who both work at a construction company, moved into a home on the north side of Charlotte on July 1. "Everyone has that dream of the little house with the white picket fence out front," Ena Perez said.

Bank Policies on ITIN Mortgages Vary

Here's a look at some of the banks that are accepting Individual Taxpayer Identification Numbers on loan applications:

• San Francisco-based Wells Fargo & Co., one of the nation's biggest mortgage lenders, launched a pilot in Southern California in late 2005. The bank said it hasn't made a decision to expand the program, which requires customers open a bank account, pay taxes for two years and prove two years of residency.

Wells spokeswoman Hillary John said having an ITIN doesn't necessarily mean an individual is in the U.S. illegally and noted the bank's job is to verify a customer's identity. "The government's responsibility is to enforce immigration laws," she said

• At Wachovia Corp., the bank is gearing up to serve more Hispanic customers as it expands into Texas and California. For a number of years, the Charlotte bank has accepted ITINs from nonpermanent resident aliens, which are individuals allowed to live and work in the U.S. for a set period of time. The bank requires borrowers to be legal U.S. residents, a spokesman said.

• Winston-Salem-based BB&T Corp. has taken ITINs since 2004 for mortgages, but customers must be legal permanent residents or have another visa status allowing them to be in the U.S., a spokesman said. ITIN loans account for less than 1 percent of the bank's mortgage portfolio, he said.

• Nuestro Banco, a Raleigh-area bank slated to open next month, plans to offer ITIN mortgages as part of an array of products and services geared to the Hispanic market. The community bank will check for proper identification but not immigration status, said chief executive David Flores.

http://www.charlotte.com/123/story/215872.html

Nuestro Banco, a Raleigh-area bank slated to open next month, plans to offer ITIN mortgages as part of an array of products and services geared to the Hispanic market. The community bank will check for proper identification but not immigration status, said chief executive David Flores.

...somebody please help with this because I'm obvioulsy not a great thinker like these bankers: How does an illegal alien possess "proper identification" when they are here illegally? What exactly is "proper identification" for an illegal alien? What am I missing or just don't understand?

Am I wrong or is it unlawful to obtain property unless you are a citizen?

My cousin who lived in California was a big wig for Bank of America. He said the way you collect on these mortgages is to go to the house and there are about 25 to 50 people living in one house and all you see are sleeping bags everywhere. You collect from all of them until you have enough money. That is what he was forced to do to collect the mortgage payments. Needless to say he is not longer employed by them. I was in shock when he told me what he had to do.

Our financial institutions should be legally forced to collect immigration status of applicants for loan applications . No different then for any employer checking a perspective employee.

Maybe the banks are clamoring to lend hundreds of thousands of dollars to illegal aliens because the American citizens who have been displaced from employment no longer have money to buy houses. Besides, American families are not accustomed to living 20 or 30 to a house, as this new "housing market" requires.

Does anyone know the way to the showers?

Wait a minute....as U.S. citizens...we CAN"T own property in Mexico ...only 99 year leases.....but they can here???????????????
WHAT IS WRONG WITH THIS PICTURE???????????????????

Wait a minute....as U.S. citizens...we CAN"T own property in Mexico ...only 99 year leases.....but they can here???????????????
WHAT IS WRONG WITH THIS PICTURE???????????????????

The Mexican constitution denies fundamental property rights to foreigners. If foreigners wish to have certain property rights, they must renounce the protection of their own governments or risk confiscation. Foreigners are forbidden to own land in Mexico within 100 kilometers of land borders or within 50 kilometers of the coast. Article 27 states, “Only Mexicans by birth or naturalization and Mexican companies have the right to acquire ownership of lands, waters, and their appurtenances, or to obtain concessions for the exploitation of mines or of waters. The State may grant the same right to foreigners, provided they agree before the Ministry of Foreign Relations to consider themselves as nationals in respect to such property, and bind themselves not to invoke the protection of their governments in matters relating thereto; under penalty, in case of noncompliance with this agreement, of forfeiture of the property acquired to the Nation. Under no circumstances may foreigners acquire direct ownership of lands or waters within a zone of one hundred kilometers along the frontiers and of fifty kilometers along the shores of the country.â€

Mexico is full of dirty rotten B*******!