Can Illegal Immigrants Get Loans?

While you're suffering from the stress of a subprime mortgage, hoping that you never slide into foreclosure, there is a group that is doing surprisingly well in the mortgage market.

We're talking about home loans to illegal immigrants. Who knows whether these loans will continue to hang in there; many things could snowball - government crackdown on illegal workers, and with an already tight job market, a squeeze on jobs for undocumented workers. No work - these illegals will likely default. We already see some signs of a "slow down" - mainly, creditors raising rates because of the recent problems in the credit world.

These mortgages are known as ITIN mortgages. If you work in the business, you know what we're talking about: people filing for a mortgage must have an Individual Taxpayer Identification Number, and they have to prove they can somehow pay the loan back, naturally - plus pay taxes even though they don't have a U.S. address (well, until they get the house - but even then, not a legal address, no?)

These loans are only a small percentage of the $2.8 trillion mortgage market. Yet, come to think of it, they are one of the bright spots in this dark and mysterious industry.

ITIN loans 90 days behind are rare; only 0.5 percent. Compare that to 1 percent of prime mortgages and 9.3 percent with those subprime mortgages. Indeed, lenders who go after this type of mortgage want them to last forever. Since the default level is almost zero, what do they have to lose?

Illegal aliens normally use an fake Social Security number so they can get a job. We've seen several workers who clean local restaurants at night, such as Calistoga Bakery in Naples, Florida, knowingly use false documents. These same people can pay taxes with a nine digit number the IRS has been issuing since 1997 just so foreigners who are not legal to get a Social Security number can pay taxes.

Of course, the IRS wants everyone possible to pay taxes, file an income tax return, regardless of who they are. Banks began accepting the ITIN number for mortgages around 2000. Why they are a better risk is because initially, the illegal immigrants are required to produce more paperwork, undergo more scrutiny than normal workers. Some banks even check checking accounts to see where the money is going.

Yes, it is possible for illegal aliens to get mortgages. And it turns out, they are a better risk than most legals. What do you think?