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Title: Illegal immigrants buy real estate and get mortgages with ITIN
Source:
USIS
URL Source: http://www.usimmigrationsupport.org/immigrants_realestate_itin.html
Published: Oct 11, 2008
Author: JOG law books
Post Date: 2008-10-11 12:30:58 by Hypocrisy Cop
Keywords: insult, to, injury
Views: 181
Comments: 2
Undocumented immigrants are able to buy homes with ITIN Many illegal immigrants come to the United States to achieve the American dream. Part of the American dream is to purchase a home and to increase one's financial well-being. In the past, some immigrants may have turned to family members or close friends who were in the United States legally to take out a mortgage for them. Today more immigrants can take out mortgages on their own without having to turn to the assistance of family and friends. Mortgage companies do not require buyers to have a Social Security number to purchase a home in the United States. Immigrants wanting to buy a home need to have a special tax ID referred to as the ITIN. The ITIN or individual tax identification number is proof that an individual pays taxes to the IRS or Internal Revenue Service. The IRS began issuing ITINs in the mid 1990s for individuals who were not eligible to obtain a Social Security number but that needed to declare their income and pay taxes. Obtaining an ITIN, a nine digit number for tax purposes, is a relatively easy process since legal residency in the Unites States is not a requirement. A large number of illegal immigrants seeking to become permanent residents obtain ITINs in order to show the USCIS in the future that they have been paying taxes while residing in the United States. Immigrants may qualify for a mortgage, but this opportunity does not necessarily translate into an easy process for them. Mortgage companies typically use Social Security numbers of applicants to run credit histories. However, many who apply with an ITIN do not have an established credit history or any credit history at all. Cash is widely used by immigrants and most of their transactions will most likely not involve credit. As a result, the approval for a mortgage loan may take longer and be more expensive. Immigrants applying for a loan must show proof of income. In addition, they have to prove that they have been consistent when it comes to paying bills. Mortgage companies tend to take higher risks with immigrants and this risk may be leveled off with a higher mortgage interest rate. Illegal immigrants cannot obtain loans that qualify for repurchase or are insured at the federal level by corporations sponsored by the government. These types of loans tend to offer the lowest interest rates available and lower down payments. Even though illegal immigrants usually end up paying a higher interest rate when using an ITIN, a larger down payment is usually not required on their behalf. However, some mortgage companies may require 20% to 30% of a home’s price as down payment. Such a high rate makes buying a home for many immigrants out of their reach. It is also possible that some immigrants may get lucky and be able to obtain a favorable interest rate. Some of the companies that are offering mortgages using ITINs instead of a social security number are Citibank, Washington Mutual and American Home Mortgage. For example, Citibank requires an ITIN, a bank account, credit references for two years and verification of residency in the U.S. for a period of two years. There is large potential for profitability for mortgage companies and banks due to the high number of illegal immigrants desiring to buy a home. Offering such loans also allows companies to start building relationships with immigrants who may become potential customers for other services in the future. However, the downfall is that these loans entail greater risks to the companies due to the lack of credit history of immigrants. More applicants using ITINs as compared to using SSNs (Social Security Numbers) may be rejected for mortgage loans because of the additional requirements in place of the normally established credit history. Illegal immigrants must also keep in mind that while they can obtain an ITIN number, they are still not eligible to obtain a SSN. As mentioned before, obtaining an ITIN may be useful in the future when applying for permanent residency in the United States. Having an ITIN shows that an individual has been paying taxes on their income earned in the United States, which is one of the criteria that is looked at by the USCIS if applying for citizenship in the future. Poster Comment: One problem with this practice: it's illegal use of a tax document. Comment on the practice by Carol, here: Sent: Friday, October 10, 2008 3:20 AM Subject: A WAY TO END HOME LOANS TO ILLEGAL ALIENS I believe these banks and loan companies are breaking the law by giving these illegals loans based on ITIN's being used for ID. Check out the Internal Revenue website and you will see what I mean. Here is a portion of the IRS information about ITIN's. What is an ITIN used for? ITINs are for federal tax reporting only, and are not intended to serve any other purpose. An ITIN does not authorize work in the U.S. or provide eligibility for Social Security benefits or the Earned Income Tax Credit. ITINs are not valid identification outside the tax system. IRS issues ITINs to help individuals comply with the U.S. tax laws, and to provide a means to efficiently process and account for tax returns and payments for those not eligible for Social Security Numbers. See what I mean? These ITIN's are for tax purposes only. Not to be used for anything else including ID for obtaining a loan for buying a car, home etc. As the IRS states: they are not valid identification outside the tax system. I think a good attorney who is well versed in the tax laws could challenge these banks and loan companies. And put an end to this mess. Carol zim711@peoplepc.com --- Good, Carol? Attorney? These are mutually exclusive terms. Lawyers created the loophole in the first place, and it was more lawyers who exploited it.
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#1. To: Hypocrisy Cop (#0)
Good stuff, HC. We're rotting from within and the stench is unbearable. It's time to operate.
The problem would seem to be with the institutions that knowingly chose to use the ITIN's to originate more loans. The further we go into this sub-prime morass, the more blame I'm putting on the lenders, and less on the poor mullets who signed on the dotted line without a clue as to what they would be facing in the future.
#2. To: Hypocrisy Cop (#0)
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