Dubbed ITIN mortgages, the loans that made homeownership a reality for thousands of undocumented workers have withered—although not because they underperformed.
The loan program highlights contradictions in U.S. polices toward illegal immigrants. Even as the Department of Homeland Security sought to deport them, the Federal Deposit Insurance Corp. goaded banks and credit unions to bring undocumented immigrants into mainstream banking if they could prove they had steady income and were creditworthy. Beginning in 2003, when banks and credit unions first offered mortgages to undocumented immigrants, the small segment blossomed. The mortgages performed better than some others, partly because of stringent lending criteria and because they usually had fixed rates over a period of time.
But amid the crackdown on illegal immigration and the economic slowdown, the market for immigrants who boast the alternative nine-digit taxpayer ID is dying.
Lenders first began to retreat last year during the debate over illegal immigration. Many institutions received a barrage of attacks from clients who opposed the ITIN-mortgage scheme.
“I got hate mail, including death threats, from people hostile to immigrant lending,” says Tim Sandos, who worked at Citigroup when that institution began underwriting ITIN mortgages for first-time, low-income buyers in a partnership with the housing arm of the Association of Community Organizations for Reform Now, or Acorn. Mr. Sandos is president of the National Association of Hispanic Real Estate Professionals.
The environment worsened after the defeat in Congress last spring of an immigration bill, sponsored by Sens. John McCain (R., Ariz.) and Ted Kennedy (D., Mass.), which was designed to put undocumented workers on the path to legalization. Amid calls for a crackdown, the Bush Administration began raiding workplaces believed to employ illegal immigrants.