The Seattle Times reports the story of a man and his family who moved to the Emerald City and bought a house there. A simple American tale, but not quite: the man was an undocumented immigrant, without a credit report or a social security number.
Seem like that should be a problem? Well, no. Lately, more and more lenders have begun offering mortgages – knowingly – to undocumented immigrants. Through one of these lenders, the Seattle man was able to secure a loan and purchase a home. (For those interested, the man now has his green card.)
How did the Seattle man get the loan? He proved he paid taxes by providing an Individual Taxpayers Information Number, and that he could pay the mortgage by providing proof of income. In lieu of a credit report, he offered a letter of recommendation from his employer. The loan was approved: no social security number, no credit report needed.
Why are lenders doing this? Are they becoming more attuned to progressive causes? Do they sympathize with the struggles of the immigrant who simply wants to enjoy a decent standard of living? Is this a new, softer side of the mortgage lending industry? Maybe we have underestimated them…
Perhaps. Perhaps not. Bob Byrd, the chairman and CEO, Bank of Bartlett, sums it up nicely in an Associated Press article. “We’re doing this because we think it’s right. We’re doing this because it’s legal. And we’re doing this because it’s profitable.”
Regardless of how you feel about the issue of undocumented immigrants living and working in the U.S., it’s perfectly legal for a foreign national to own property in the U.S. It makes no difference whether the homeowner-elect is living and working here illegally. A growing number of enterprising lenders recognize this and, in fact, see undocumented immigrants as a large, untapped market: estimated at $60 billion – according to the Associated Press article.
Part of that profitability lies in the higher interest rates lenders can charge this “high-risk” population. What if an undocumented lendee is sent back to his or her country of origin, leaving the house – and mortgage payments – behind? Because of this plausible eventuality, lenders add several points to the average going interest rates; predatory lenders, of course, charge much more, sometimes doubling the rate.
Because many feel undocumented immigrants don’t even have the right to be here, you’ll likely hear very little public outcry over any predatory lending practices aimed at them. Still, it might be in everyone’s best interest to consider what happens to our Emerald City family once its members are legal residents or citizens. Do you think the bank steps in at that point and offers a lower rate? The deportation risk is gone, right? So, shouldn’t the rate change accordingly?