Miriam Jordan, Wall Street Journal, July 10
MILWAUKEE — Javier and Araceli Garcia, illegal immigrants from Mexico, never imagined that the U.S. government would help them buy a home.
But last year, the couple secured a $54,600 mortgage to buy the gray, 1,158-square-foot bungalow that they had been renting for eight months. The Wisconsin housing authority financed the loan. The Internal Revenue Service gave them an identification number that let them apply for it at local Mitchell Bank, which was happy to take their business.
“We thought we would never buy a home, because of our (illegal) status,” said Mrs. Garcia.
Competition for new customers is driving banks to offer home loans and other financial services to illegal immigrants — and they are getting help from government agencies, such as the Federal Deposit Insurance Corp.
The FDIC encourages banks to lend and invest in underserved markets regardless of customers’ immigration status.
In the 1990s, Mitchell Bank’s old turf on Milwaukee’s South Side began to see an influx of Latino immigrants. James Maloney, the chairman of Mitchell Bank, saw the newcomers as a solution to the bank’s falling fortunes. Its assets fell to $60 million in 1999, from $95 million in the 1990s.
Maloney decided in 2002 the bank should offer mortgages even to illegal immigrants, convinced that would revitalize the area.
As demand for home loans gradually increased, a problem arose: Taking on the loans was creating more risk than a small bank could shoulder on its own.
Unlike other mortgages, the loans were not salable on the secondary market to Fannie Mae and Freddie Mac, which don’t deal in loans for illegal immigrants as a matter of official policy. That means Mitchell Bank had to hold the loans in its portfolio rather than spreading the risk.
The issue was resolved last year. Maloney made a presentation to the Wisconsin Housing and Economic Development Authority, which started a pilot program for illegal immigrants in which it takes the loan risk.
“We can stick our heads in the sand and pretend these people don’t exist, or we can help them be in the U.S. with assets,” authority head Antonio Riley said.
“Our job is to encourage banks to lend and invest in underserved markets,” said Michael Frias, an FDIC official in Chicago. “We don’t make distinctions of immigration status.”