Pilot program funds mortgage loans for illegal immigrants (ILLEGAL ALIENS)

MILWAUKEE - In a pilot program described as the first of its kind, an agency created by the state government is making it easier for illegal immigrants in Wisconsin to obtain mortgage loans.

Immigrants who do not have Social Security numbers - a common requirement for loans - can use an alternative government-issued tax number to get financing for new homes, under the Wisconsin Housing and Economic Development Authority (WHEDA) program.

Many holders of the Individual Taxpayer Identification Number (ITIN) are living and working illegally in this country, even though they pay taxes.

Some say the Wisconsin program is an example of how groups and companies are starting to recognize the potential market of immigrants. Critics say the program provides a reward for those who are violating immigration laws.

Some banks already issue mortgage loans to illegal immigrants, but WHEDA is believed to be the first and only quasi-government organization to buy such loans from the banks, said Geoff Cooper, director of emerging markets for MGIC Investment Corp., and Gary Acosta, president of the National Association of Hispanic Real Estate Professionals.

"Anyone will tell you the real growth in home ownership in the state, in the country, is in the minorities and immigrant market," said Antonio Riley, executive director of WHEDA, a public corporation created by the Wisconsin Legislature in 1972.

The agency, which funded more than 4,000 home mortgages last year, underwrote 87 mortgage loans to ITIN holders since the program started in April. Six banks in Milwaukee and Madison participate in it, and the authority has talked about expanding it to Racine, WHEDA spokesman Ron Legro said.

But state Sen. Glenn Grothman, R-West Bend, is threatening legislative action if WHEDA doesn't kill the program, which he contends rewards people for breaking the law.

"It is an insult to border guards and immigration officials who are trying to enforce the immigration law," he said. "It is an insult to people who are waiting patiently to enter the country legally."

Financial experts say WHEDA's program was simply a reaction to the country's changing demographics. Estimates of illegal immigrants in the country range from 10 million to 12 million, Acosta said.

"If this becomes a standard in the industry it could have a multibillion-dollar positive impact on the economy," he said.

Some private banks already write mortgage loans and open bank accounts for ITIN holders. MGIC, a Milwaukee-based issuer of private mortgage insurance, started insuring ITIN loans last fall.

Using the tax numbers allows banks to know the true identities of immigrants, who might otherwise go to predatory lenders or use false Social Security numbers to get mortgage loans, MGIC's Cooper said.

ITIN was created in 1997 for the Internal Revenue Service for foreign citizens who needed to pay taxes in the United States but could not obtain Social Security numbers. The government has issued about 7 million ITINs as of last year, the IRS said.

ITIN gained currency in the financial market after banks realized the potential of the immigrant market.

About 70 percent of immigrants from Latin America are "unbanked," said Michael Frias, community affairs officer at the Federal Deposit Insurance Corporation.

Even the Patriot Act, created to fight terrorism after the Sept. 11, 2001, attacks, acknowledged ITIN is an acceptable form of identification for banks, said Frias, who spearheaded a Midwest task force to extend banking services to immigrants.

Milwaukee's Mitchell Bank was among the first in the nation to have an ITIN loan program. The bank on Mitchell Street served European immigrants in the neighborhood in the early 1900s. As years went by, Hispanics replaced the Germans and Poles, said James P. Maloney, the bank's president and chairman.

"As the neighborhood changed, we ultimately decided we had to change or move," he said.

The bank now hires Hispanic employees, has all documents in Spanish and is authorized to help immigrants obtain ITINs. It created credit history for immigrants who often don't have any by examining their utility bills, rent payments and the money they send home. The ITIN loans performed better than conventional loans, Maloney said.

The home ownership rate on Milwaukee's largely Hispanic South Side is less than 20 percent, and the immigrant market is "more than we could ever handle," Maloney said.

But the bank has limited capacity for ITIN loans, because companies that usually buy mortgage loans from banks refuse to underwrite these loans, saying they are too risky, Maloney said. The WHEDA program fills that void.

"It's very forward thinking on their part," he said. "They couldn't be doing anything better for our neighborhood."

But Acosta said unless the major players enter the market, the WHEDA program will have minimum impact on the industry.

"Unless Fannie Mae, Freddie Mac and FHA (Federal Housing Administration) start doing this type of loans, it's only going to have a marginal impact."

Have you seen this article by Michelle Malkin? The so-called "heart-warming" story makes me angry. I want to hear about genuine U.S. citizens buying their dream homes, not people who came here illegally.

Home loans for illegal aliens?!
Michelle Malkin

August 29, 2003

The American dream of home ownership, complete with the white picket fence, is alive and well for those who break our laws and break down our fences to get in.

Last week, The Washington Post published a rosy front-page tale headlined, "Illegal Immigrants Buy Into Homeowning Dream." The article detailed how illegal aliens in the Washington, D.C., area are successfully hooking up with cunning mortgage brokers and complicit lenders to secure home loans. Despite federal laws making it illegal to violate the borders, overstay visas, and recruit, harbor and encourage illegal aliens, the Post notes that the illegal alien home loan schemes are "legal."

Here we are, nearly two years after the September 11 terrorist attacks underscored the need for consistent immigration law enforcement, and the lesson continues to be ignored in the nation's capital.

The Post's heart-warming story began:

"Gerardo Cabrera fell in love with the house immediately. There was the bay window in the living room, the fireplace in the den, and -- most enchanting to a man raised amid the concrete of Mexico City -- the woods in the back yard. And so the auto mechanic and his wife, a secretary, decided to pay $200,000 for their own piece of suburban Gaithersburg, a classic tale of immigrants achieving the American dream. Except for one detail: At the time, they were in the United States illegally."

While law-abiding homebuyers must supply airtight proof of identity, legal residence and a Social Security number to lenders, illegal alien purchasers such as Cabrera (a visa overstayer who recently received a green card) need only supply a "taxpayer identification number" (TIN) issued by the Internal Revenue Service. No criminal background check is required before applying for a TIN, which many banks now accept from illegal alien customers as a primary form of identification.

Cabrera's broker, Alma Preciado of Metropolitan Financial Services in Silver Spring, told the Post that about 10 percent of her mainly Latino clientele qualify for home loans using a TIN instead of a Social Security number.

That's just the tip of the illegal alien homeowners' iceberg. The Post failed to note that Federal Housing Administration-approved loans through the U.S. Department of Housing and Urban Development do not require lenders to obtain proof of citizenship or legal permanent residence. These FHA/HUD programs, primarily targeting minorities and first-time homebuyers, are federally insured and require minimal down payments.

A 25-year veteran of the mortgage industry in California confided to me recently: "It boggles the mind to think how many illegal aliens are homeowners in this country thanks to these programs, all fully insured by our government. Because of fear of lawsuits for discrimination I can also tell you that a lender may have a borrower who speaks little or no English who claims to be either a citizen or resident alien and it will not be questioned nor any proof required. Since FHA does not require any such documentation, a lender cannot cite their regulations as a basis for the request as they can on conventional loans."

Another easy avenue to home ownership is through the use of bogus Social Security cards. Moneylenders have no access to a verification system to check Social Security numbers before approving loans. A Department of Homeland Security investigator informs me that an ongoing federal probe of FHA/HUD-backed loans found that "a staggering number were approved to persons with false Social Security numbers." The Denver metro area alone accounted for 20,000 to 40,000 of the FHA-approved loans for suspected illegal aliens. "Even if a small percentage of the loans were foreclosed, HUD could be bankrupted," the homeland security official said.

A spokeswoman for the U.S. General Accounting Office told me this week that the agency's office of special investigations plans to report on the results of the probe later this fall. But "considering the size of Los Angeles, New York, Chicago, Houston, and other large cities throughout the United States known to be inundated with illegal aliens," says my source, "I don't think the federal government is willing to expose this problem for financial reasons as well as for fear of political repercussions."

America: Still the world's home sweet illegal alien home.

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