Mortgage Lending to Immigrants in the United States Demographics reveal that the future home buying population will be largely and increasingly comprised of immigrants, in particular minority immigrants. It has never been illegal to originate U.S. mortgages to non-citizens and MBA continues to support this position. MBA opposes legislative or regulatory restrictions at the state or federal level that would unduly prohibit, or increase the risks of, providing homeownership financing opportunities for immigrants residing in the United States. Further, MBA does not support any local, state or federal legislative or regulatory restrictions that would impose requirements for mortgage lenders to determine the immigration status of borrowers possessing valid documentation for loan approvals.
The Census Bureau estimated that the number of foreign-born people living in the United States topped 33 million and accounted for nearly 12 percent of the population in 2003-its highest share since 1930. Half of those people have arrived in the United States since 1990, and the foreign-born population is now growing at a rate of about 1 million people per year. It is estimated that about 12 million undocumented immigrants currently reside in the United States.
The U.S. immigrant population presents challenges to the traditional methods of mortgage underwriting and thus, has a low rate of homeownership. Mortgage bankers, as part of their community reinvestment efforts, are responding to these challenges in a number of ways.
Since many immigrants do not have established lines of credit in the United States, the mortgage banking industry is creating alternative forms of establishing creditworthiness. These may include the use of rental payments, utility payments, or money transmittals to home countries. The industry is working to develop automated systems that can use such data to create credit scores that would significantly lower origination costs for such borrowers.
Some mortgage lenders have adopted policies that allow for alternative forms of identification, such as the "Matricula Consular" issued by the Mexican Embassy. The Matricular Consular is an official identification issued by Mexican consulates in the United States.
Another policy that serves certain immigrant homebuyers is the use of Individual Tax Identification Numbers (ITIN) issued by the U.S. Internal Revenue Service (IRS) to verify a borrower's income. ITIN loans, as they are known, allow lenders to provide homeownership opportunities for immigrants who are paying taxes in the United States. In the past, ITIN loans have been offered by smaller community banks. Recently, larger mortgage banking companies have become involved in the products. MBA is aware of three states Housing Finance Agencies (HFA) that either have or are planning to offer the product. Private mortgage insurance is available for ITIN loans and signs of a fledgling secondary market are beginning to emerge. Lenders who offer this product have indicated that such loans perform very well, in many cases with nearly perfect payment records.
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