Photo Credit: Greg Westfall
Uprighting the housing market
President Obama’s immigration reform executive action is a hot topic and continues to stir emotions on both sides of the issue. Could granting 5 million immigrants temporary relief from deportation also give relief to the mortgage industry?
Specifically, mortgage lender relief would be in the form of easing lenders’ and borrowers’ concerns about mortgages going to undocumented workers; immigrants who qualify for getting a mortgage because of having Individual Taxpayer Identification Numbers (ITIN).
Housing and Urban Development (HUD) Secretary, Julian Castro, issued a statement after Obama’s Thursday evening address in support of the action. He called the effort “an important step toward fixing our broken immigration system.” Castro, who is of Mexican ancestry and is the former mayor of San Antonio, Texas, a city with a 63 percent Hispanic population, underlines the importance of this executive action with his assessment. But Castro’s statement doesn’t specifically address how the President’s actions would affect the mortgage and housing markets or HUD’s direction.
According to recent research from Fannie Mae, immigrants narrowed the homeownership gap at a faster clip during the 2000’s than in the 1990’s. The “Housing Insights” report released in August analyzed the housing crisis’ effect on the homeownership rates between the immigrant and native-born population. According to U.S. Census 2010 data, 52.4 percent of immigrants own homes compared to a native-born homeownership rate of 67.1 percent. Native-born homeownership declined slightly from 2000, which was 68.3 percent, but during this time, immigrant homeownership increased from 2000’s 49.8 percent rate.
These homeownership figures could increase for immigrants as a result of this reform effort, which could mobilize the nearly 11 million undocumented immigrants who are eligible to qualify for mortgages, using ITINs supplied by the IRS for tax-filing purposes. Although these immigrants have ITINs, very few lenders offered them mortgages. Citibank is one of the few that do and has been doing so since 2004 in partnership with the Neighborhood Assistance Corporation of America. Mark Rogers, a spokesman for Citibank, said ITIN activity has fluctuated over time, saying that activity is “currently brisk, but represents a very small and specialized portion of Citi’s mortgage lending. “ He also said the loans’ performance is “somewhat better than our FHA loans.”
Another mortgage lender, Venta Financial Group, launched a program this summer that offers ITIN mortgages to undocumented immigrants in Arizona, California, Florida, Georgia, Nevada, Texas and Washington.
“At the end of the day, the folks that are immigrants are here for the American dream and are here not to be renters all their lives,” said Jason Madiedo, Venta’s President and Chief Executive Officer. “Part of it is being able to educate and get this type of consumer out of the shadows. The solution is to educate them, and show them that the opportunity for homeownership is real.”
Because of undocumented immigrants’ concerns that taking out a mortgage will raise their citizenship status, Madiedo said Venta has written only five mortgages. With the executive action, presumably there’s no need for undocumented immigrants to worry.
HUD’s Castro said, “These are common sense ideas that will benefit 5 million individuals and their families, and have a long lasting and positive impact on our economy. These executive actions help secure our nation by strengthening our border, and prioritizing the deportation of felons, not families.”
National Mortgage News. What Obama’s Immigration Plan Means for Mortgage Lenders