From the WSJ:
Unlikely Mortgage Winner
Illegal-Immigrant Loans
Have Been Solid Bets;
Threats Are Looming
By MIRIAM JORDAN
October 9, 2007; Page C1
Despite the downturn of the mortgage market, a type of home loan has remained surprisingly sturdy: one extended to illegal immigrants.
Now, the question is whether these loans will continue to hold up. A number of factors — including a possible government crackdown on illegal workers and a slowdown in job prospects for undocumented laborers — threaten the ability of these borrowers to keep paying. And there are signs of a slowdown as some lenders have raised the interest rates they charge because of the recent mayhem in the credit markets.
Known as ITIN mortgages because applicants must have an individual taxpayer identification number, the fixed-rate loans are designed for immigrants who can prove they are creditworthy and pay taxes even though they don’t have legal permanent residency in the U.S.
The mortgages represent a fraction of the $2.8 trillion mortgage market. But they are a bright spot in today’s gloomy mortgage industry.
For loans more than 90 days in arrears, ITIN mortgages have a delinquency rate of about 0.5%, according to independent estimates. That compares with 1% for prime mortgages and 9.3% for subprime mortgages extended to those with spotty credit histories.
Many lenders who have sought this business remain bullish.
“Our default level is almost zero,” says Scott Hastings, director of marketing for Citizens Home Loan Inc., a Charlotte, N.C.-based lender that is active in 33 states. The bank has been originating ITIN mortgages for almost two years, and the loans now make up about 20% of the institution’s mortgage business. “It’s an absolutely promising market. These Hispanic families will pay their mortgage before anything else.”
…
A Department of Homeland Security plan to crack down on employers of illegal immigrants is giving some banks that issue ITIN mortgages the jitters. The new policy, which has been delayed by a court challenge, would force employers to terminate workers whose Social Security numbers and names don’t match. Those that don’t comply would face stiff penalties or criminal prosecution.Only one of 120 homes financed by Mitchell Bank in Milwaukee, an ITIN-mortgage pioneer, has gone into foreclosure in seven years. But, “if these immigrants start to lose their jobs, they may have trouble paying their loans,” says James Mahoney, chairman of Mitchell Bank. “That would severely hurt the bank.”
http://blog.nj.com/statattack/2007/07/subprime.jpg
cool subprime in your neighborhood map
ITIN mortgage equates to illegal immigrant? Talk about sloppy journalism.
Anyone not eligible for a SSN can get an ITIN. If you are legally present in the US on any one of the many visa classifications that are not employment-eligible, you do not qualify for an SSN but you can get an ITIN.
Why should they not be able to pay their mortgage? They dont have to pay income taxes & get free health care.
By Saikat Chatterjee and Anurag Joshi
REUTERS
6:37 a.m. October 9, 2007
MUMBAI – The U.S. subprime housing crisis will not peak until 2009, rating agency Standard and Poor’s said on Tuesday, adding it had underestimated the extent of fraud in the industry.
S&P expected the world economy to grow 3.6 percent in 2007 and 3.5 percent in 2008, with emerging market economies driving growth. The U.S. economy would lag at 2 percent in both years, down from 2.9 percent in 2006.
AdvertisementHousing was the major weakness in the U.S. economy and the subprime crisis – which roiled global markets in late July and August – was far from over, although its shock value was wearing off, David Wyss, S&P’s chief economist, said in Mumbai.
“We underestimated the extent to which fraud was occurring in the industry,” he said.
“It looks, based on some surveys that had been done, the extent of frauds increased sharply in 2006.”
S&P said the U.S. Federal Reserve had estimated that subprime losses could reach $150 billion, and Wyss said that would feed through to unemployment and remain a brake on growth.
“We think in the United States the housing market is not going to bottom until winter. We think the losses in these sectors won’t really hit their peak until 2009,” Wyss said.
“We are not halfway through with this crisis yet.”
Emerging markets were far less vulnerable to credit market turmoil than during previous crises because of the capital flows attracted by high economic growth coupled with improved corporate governance standards, S&P said.
“World growth remains strong despite the weaknesses seen in the U.S. economy – especially in emerging markets because of healthy domestic demand conditions and export strength to non-U.S. markets,” it said in a report.
“The fact that the U.S. slowdown is concentrated in housing, which has relatively low import content, helps,” it said.
High commodity prices were also helping many emerging market economies, such as Latin American and African countries that are major exporters.
S&P estimated that, on a purchasing-power parity basis, the United States would contribute only 9 percent of world growth in 2007, compared with China’s 33 percent and India’s 12 percent.
Greg Says:
October 10th, 2007 at 12:54 am
“Why should they not be able to pay their mortgage? They dont have to pay income taxes & get free health care.”
How do you know that they don’t pay income taxes?
And what does health care have to do with anything? Do you pay your own health care? I don’t. My job pays for it.
Only self-employeed pay for their own healthcare. The rest have their employeers pay for ti.
Wrong Happy camper – very wrong. My employer pays 80% for my family policy & I pay other 20% ($140 biweekly). Illegals walk into hospital & get it for free. You can’t collect from them cause they have no SS# and the give bogus ID so you dont know who the hell they are.
Name me one employer (except the stupid state) that pays 100% of employees health insurance.
On income taxes – If you think the day laborers are paying Federal, State, FICA & medicare taxes on their income than you need to put down the crack pipe.
Let’s go back to the good old days…
http://en.wikipedia.org/wiki/Know-Nothing_movement