As immigration laws are still catching up to banking and finance practices, an increasingly common service is being offered to those without a Social Security number: undocumented mortgages. These loans are designed, and marketed toward, those in the U.S. either illegally or with only temporary resident status. In other words, undocumented mortgages are for working members of the United States without a Social Security number. These mortgages are controversial, but the process of granting mortgages for those with individual tax ID numbers is entirely legal. As of 2013, only a select few lenders are granting these loans.
As no current or pending law or legislation prevents undocumented workers from acquiring home mortgages, some mortgage lenders are quietly marketing these undocumented mortgages to these customers. Legally, the government -- neither the state or federal -- cannot prevent these homeowners from acquiring home lending products, so long as they meet the identification criteria laid out in current home lending laws. The individual tax ID numbers are not designed to be identification outside of taxation purposes, but, according to CNN Money, "there are no explicit rules banning the use of ITINs in obtaining mortgages." Therefore, with the rise in undocumented workers, some mortgage companies are branching into a lucrative market.
In order to qualify for a home mortgage without a Social Security number, the undocumented workers are relying upon their ITIN, or Income Tax Identification Number. These numbers give the workers the option to pay taxes on the income they receive -- but it does not give them the privilege to partake in the social services of the United States. With these ITINs, mortgage lenders can verify the homeowner's identification and proceed with the underwriting of mortgages.
Some claim that undocumented mortgages help institutionalize bad behavior, law-breaking and a culture of impunity for those who do not obey the immigration laws and procedures in the United States. Lenders, on the other hand, argue that these loans provide a necessary outlet for those who are legitimately in need of home ownership. In addition, some advocates and lenders argue that the established community of undocumented workers is here to stay, and deserve some of the privileges of the United States.
ITINs and Residency
The main driving factor that allows for undocumented mortgages is the ITIN. The Internal Revenue Service allows tax-paying persons in the U.S. to obtain these numbers without proving residency or immigration status. Those who argue against undocumented mortgages, and undocumented immigrants, claim that simply by forcing the IRS to verify residency, it is possible to halt the distribution of undocumented mortgages.
Based in Eugene, Ore., Duncan Jenkins has been writing finance-related articles since 2008. His specialties include personal finance advice, mortgage/equity loans and credit management. Jenkins obtained his bachelor's degree in English from Clark University.