MORTGAGES FOR UNDOCUMENTED IMMIGRANTS
Travel to a place like California’s Salinas Valley, the nation’s “salad bowl,” where a significant percentage of the produce you see in grocery stores is raised (think 70% of lettuce and nearly 50% of the broccoli), and you’ll see acres and acres of strawberries, artichokes, lettuce, broccoli, all of it under cultivation and harvested by Latinos. About 80% to 90% of them (according to the farmers who hire them) are undocumented immigrants. Obviously, these immigrants are playing a critical role in the nation’s agricultural economy and the provision of food to our dinner tables, but what about housing?
There are many areas around the country with large populations of undocumented immigrants, many with children and even grandchildren who were born on U.S. soil, and plenty of them want the American Dream. “Immigrants come to this country for economic reasons,” said NAHREP’s Acosta, “and homeownership is a big part of the American Dream.” Given the family-centric culture of Hispanics, it’s not uncommon for multiple adult generations to live under one roof.
And it’s not impossible for an undocumented immigrant with a tax identification number and W-2 to obtain a home mortgage. While Acosta doesn’t see this as a big growth area among traditional financial institutions, he says companies seeking niche markets in an effort to differentiate themselves from the competition are increasingly getting back into the offering of Individual Tax Identification loans.
Prior to the recession, Bank of America had offered ITIN mortgages for undocumented immigrants, and surprisingly, according to Myers, foreclosure rates for those loans have been lower than for other mortgage loans when one controls for the time period when houses were purchased. “Immigrant homeowners depend on multiple income earners,” Myers explained. “They often have down-payment contributions from multiple family members, more earners, and they see the home as an anchor.”
But banks really aren’t keeping up with changing demographics or forms of income earning. “Underwriting,” Myers said, “remains pretty traditional.”
According to the Partnership for a New American Economy, were the nation’s estimated 11 million undocumented immigrants deported, U.S. housing wealth would drop by $1 trillion while the U.S. manufacturing sector would lose about half a million jobs.
Masnick said he thinks banks have been scared off by the fact that in 2009, a lot of undocumented immigrants who found they could purchase homes without much documentation fell victim to the housing bubble like everyone else, lost their construction industry jobs, couldn’t pay their mortgages, and then ended up in foreclosure. But given the new regulatory environment, Masnick said that’s not going to happen again. “Banks are going to have to figure this out, and banks serving high immigrant populations will make allowances.”
Community banks in areas of high immigration population are stepping up to the plate. Las Vegas-based Venta Financial Group, which caters to the Hispanic communities in Nevada, California, Arizona, Texas and Florida, offers ITIN mortgage loans. They are 30-year fixed-rate loans with a 30% down payment requirement.
Venta’s CEO Jason Mediedo said the loans are actually good for lenders. Because of the high LTV ratio and interest rates, they really favor lenders.
Perhaps Acosta may be on to something when he says, tongue in cheek, “The immigrant market is not for everybody, just somebody who wants to be in business in five years.”