ITIN Loans Help Immigrants

ITIN loans offered by Citibank and Wells Fargo; others may follow

The mortgage industry has always been eager to adapt to changing market forces. When interest rates got high, adjustable-rate loans became popular. When savings rates declined, loans requiring little or no down payment were introduced. And now that immigrants are increasing their earning power, a few national banks have introduced ITIN loans, which do not require Social Security numbers.

These loans are essentially targeted towards illegal immigrants, who do not have Social Security numbers. In order to encourage immigrants to pay income taxes, the Internal Revenue Service began issuing Individual Taxpayer Identification Numbers to those requesting them in 1996. These numbers are issued for taxpaying purposes only; they are not turned over to other branches of the government that might be concerned about those who are here illegally.

Recently, both Citibank and Wells Fargo have slowly introduced loan products that are intended for those customers who have only an ITIN. While these loans are offered primarily in California at the moment, they may also be available in other cities. Citibank, which has issued 72 such loans in the last two years, offers them in California, Baltimore, Jersey City, Washington, D.C., Chicago, and select other communities. Those who are interested should contact their local Citibank branch. Wells Fargo currently offers ITIN loans in Los Angeles and Orange County, California only. Several smaller California banks may offer them, as well. Smaller lenders offer the loans in nine other states.

The potential market for these loans is huge, as it has been estimated that there are currently more than ten million immigrants living illegally in the United States. This constitutes a large market for lenders, who are seeing their business dwindle as interest rates and housing prices rise. The industry, always aggressive, is constantly looking for any group that might add to its customer base.

The ITIN loans are not without their critics, which accuse the industry of offering home loans to people who shouldn’t be living here in the first place. While such loans are completely legal, there is a bit of grumbling about them in Congress and it is possible that some action may be taken in the future towards eliminating them. At the moment, there is not a bill in Congress to restrict such lending, but there are bills currently being studied that would more severely restrict illegal immigration.

ITIN loans are more expensive than other home loans, as the credit check is more complicated. Most immigrants have little or no credit history and the possibility of foreclosure is higher on such loans. As such, closing costs and the interest rates will be higher than for other loans, and the time it takes to process the loan will be longer.

On the whole, most people would rather live in a neighborhood of owners rather than renters, who seldom take good care of their property. That being the case, ITIN loans probably represent an overall good in the community. It would appear that, in time, such loans will be quite common and will eventually be regarded as just another type of mortgage product that the lender can make available to a home buyer.