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Mortgage Programs for Homebuyers Who Lack Residency

Las Vegas lender makes loans to borrowers with ITINs

Dec. 28, 2017

By MARGOT ROOSEVELT The Orange County Register (Tribune News Service)

Residency is not a requirement for owning real estate in the United States.

More than 3.4 million undocumented immigrants are homeowners, according to a Migration Policy Institute analysis of U.S. census data. That's nearly a third of the estimated 11 million people who lack legal residency.

They pay an estimated $3.6 billion in annual property taxes, according to the Institute on Taxation and Economic Policy.

"We don't look at who is right or wrong," said Miguel Narvaez, Chief Production Officer for Las Vegas-based Alterra Home Loans, which funds about 100 mortgages a year for undocumented families, including many in Southern California.

"We look at whether someone meets the requirements to buy a home."

Some undocumented immigrants pay in cash, but a 2003 ruling by George W. Bush's administration enabled many to borrow from credit unions, independent lenders such as Alterra and even from Citibank, which works through the Neighborhood Assistance Corporation of America, a national nonprofit.

The Bush-era ruling allowed customers without Social Security numbers to gain Individual Taxpayer Identification Numbers ( ITINs) to establish bank accounts.

Two-thirds of Latinos in the U.S. are citizens, including many whose families have lived in the U.S. for generations. About 20 percent hold legal visas, including green cards. And about 10 percent are undocumented, constituting three-quarters of the U.S. population without legal residency.

Efforts to assist the undocumented can be controversial, as the Trump administration ramps up border enforcement and deportations. But to some lenders, the practice is simply good business.

Qualifying for an ITIN mortgage product is rigorous: borrowers must have a 20 percent down payment, have two years of employment in the same type of work and show two years of tax returns using their ITIN number.

Because Fannie Mae and Freddie Mac, the federal mortgage backers, will only buy loans held by legal residents, there is no secondary market for ITIN mortgages. Thus interest rates are close to 8 percent, about twice the national average.

However, Alterra sees little risk. To date, none of its ITIN borrowers has defaulted or been late on a payment. And the firm plans to cut the down-payment requirement to 10 percent in January, Narvaez said.

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