ITIN home loans make housing available to nearly everyone

ITIN loans do not require a Social Security Number

The mortgage industry has enjoyed booming business for the last five or six years as people who previously pumped their money into high tech stocks have forsaken those for real estate. This, combined with interest rates that have been near historic lows, has led to an unprecedented increase in profits for lenders, real estate agents and anyone else connected with the real estate industry.

But the market has recently slowed, as interest rates have crept upwards and home prices have reached incomprehensible levels. This has led to a renewed effort by mortgage companies to find new ways to lend money or to find ways to lend money to people who otherwise wouldn’t qualify.

One result of that effort is the ITIN home loan. This loan makes it possible for someone who does not have a Social Security number to obtain a home loan. A Social Security number is usually required for any financial transaction in the United States for tax reasons. But many people who live here, particularly illegal immigrants, do not have such a number. Opinions vary about illegal immigrants, but there are more than ten million of them and they need a place to live. An ITIN loan will allow them to find and purchase a house.

ITIN stands for Individual Taxpayer Identification Number. 

This is a number provided by the Internal Revenue Service for taxpayers who do not qualify for a Social Security number. Once a filer has an ITIN, her or she may apply for a home loan through one of several lenders who offer such services.

It’s not quite as simple as applying for a loan with a Social Security number, however. Traditionally, mortgage lenders use the Social Security number to check the FICO credit score on a borrower. An ITIN borrower is not likely to have a credit report at all. Most people who are here illegally work with cash, and are unlikely to have any previous transactions that will have resulted in a credit report for them.

Without a credit report, the process of approving a loan becomes much more cumbersome, time consuming and expensive. Borrowers must provide proof of income as well as proof that they have some sort of history of regularly paying bills. Because of the time involved in handling this extra documentation, loan approval may take several times longer than with traditional mortgages. In addition, the interest rate on the loan will certainly be higher than for other mortgages in order to account for the additional risk taken on by the lender.

This product is a relatively new one and so far, only three or four national lenders are offering them. Those lenders currently include Washington Mutual, Citibank, and American Home Mortgage. Others may follow, depending on how the process seems to work for those already trying it. Those lenders will have to decide if the additional business is worth the substantial extra work involved in granting the loans, particularly since more applications will be denied with these loans than with traditional mortgages.

Still, the market is there, and it would seem quite foolish for mortgage companies to turn away business. Our guess is that they won’t.