Politics Undercut Mortgages For Illegal Workers

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Over the past four years, tens of thousands of illegal immigrants living in the U.S. have bought homes. Banks that have made such mortgages say in some cases they perform better than some loans taken out by U.S. citizens. But many lenders are pulling out of this market because of the downturn in the economy and political reactions.


In this country, the housing boom of recent years helped create a new group of homeowners: illegal immigrants. Tens of thousands of people bought their own piece of the American dream over the past few years. In fact, some banks who issued these mortgages say they performed better than the national average. Illegal immigrants may be doing a better job of paying their mortgages than the rest of us, on average. But the economic downturn and political reaction to these loans has affected this corner of the market. And we have more from Nancy Mullane.

NANCY MULLANE: Pedro Morlett(ph) is a successful real estate broker in the northern California city of Danville. One way he's been able to build his clientele is by cooking for them.

Mr. PEDRO MORLETT (Real Estate Broker): Mole, or I will make a green enchiladas or red enchiladas. So it's traditional Mexican food. I'm from Mexico City. It's just a way to connect.

MULLANE: Four years ago, the bilingual real estate broker began connecting with a new clientele, undocumented immigrants, when he found out they could qualify for mortgages using their nine-digit ITIN, or Individual Taxpayer Identification Number. The IRS gives ITINs to undocumented immigrants in place of Social Security numbers, so the federal government can collect and keep track of their taxes.

Mr. MORLET: They're illegal, but they're paying their taxes. They're looking forward to paying their taxes because that makes them feel part of society.

MULLANE: Morlett(ph) bought ads in the local paper and visited nearby factories. Since then, 10 percent of the homes he sold have gone to undocumented immigrants. ITIN mortgages have been good business for real estate brokers and banks. These homebuyers put cash down, get 20 to 30-year fixed mortgages, and pay their bills.

Mr. TIM SANDOS (President, National Association of Hispanic Real Estate Professionals): What they found, indeed, was that the performance was outstanding.

MULLANE: Tim Sandos is president of the National Association of Real Estate Professionals, or NAREP. Since 2000, he estimates undocumented immigrants have taken out more than a billion dollars in mortgages. [POST-BROADCAST CORRECTION: Tim Sandos is president of the National Association of Hispanic Real Estate Professionals.]

Mr. SANDOS: They had pent-up cash. They just had not had a vehicle with which to be able to utilize it to purchase a home in the past. The ITIN now provided the opportunity for them to make that home purchase.

MULLANE: Every single person interviewed for this story - including real estate brokers, bankers, and mortgage insurers - reported that ITIN mortgages have performed surprisingly well, even better than conventional loans. Sandos says across the country ITIN mortgages have had a delinquency rate of a half of one percent. Compare that to the recently reported 6.4 percent delinquency rate for all home loans. One of the largest ITIN lenders in the U.S. has been Second Federal Savings in Chicago. Mark Doyle is president and CEO. He says they've originated more than $120 million in ITIN mortgages.

Mr. MARK DOYLE (President, Second Federal Savings & Loan Association, Chicago): People are feeling the pressure of the federal government now, and many municipalities are giving police departments the authority to pull people over and arrest them. That's causing a problem for a lot of our borrowers as well.

MULLANE: Tim Sandos, now president of NAHREP, says when he was working with Citigroup and developing their ITIN mortgage program, he received calls, even death threats, because he was working with undocumented immigrants.

Mr. SANDOS: Until a new president is elected and there is a final solution on immigration reform, most financial institutions are going to shun the political risk and reputational risk that comes with providing these types of loans.

MULLANE: That's on top of credit tightening all around. Immigrants, like everyone else, are being hit hard by the erosion of the economy. Sandos and others say even these ITIN mortgages are now showing signs of faltering. For NPR News, I'm Nancy Mullane.

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Correction Nov. 10, 2008

We incorrectly identified Tim Santos as head of the National Association of Real Estate Professionals. He is actually the president of the National Association of Hispanic Real Estate Professionals.



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