Undocumented mortgage: Home-buying solutions for temporary residents

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By: Phil Bradford
on 18th Mar,2015

The law lags behind in helping the immigrants access various banking and financial services.
Undocumented mortgage: Home-buying solutions for temporary residents


The law lags behind in helping the immigrants access various banking and financial services. But, still people with no Social Security number get a crucial financial help. And that is through undocumented mortgage. People who are living in US (without any permit) on a temporary visa, will be the most benefited ones.

This means undocumented mortgages have been designed to help the immigrant workers. These people are living in the United States without a proper Social Security number. But the catch is, undocumented mortgages are controversial mainly due to the involvement of the shady borrowers. But, these loans are offered using a valid individual tax ID numbers. Such mortgages are completely legal and acceptable. Till date, only a certain number of lenders are said to be providing this kind of loan.

Undocumented mortgage – Legal or illegal

With no proper law, some lenders are providing these loan to illegal immigrant workers. To grow their business, these lenders are marketing the loans sly.

Federal and state agencies are ill-equipped to prevent lenders from providing the undocumented mortgages. Also, there is no law to stop the borrowers from getting the loan. This is mainly happening because of lending criteria followed in the country.

Basically, the use of individual tax ID numbers for identification purpose is prohibited. That can only be used to file taxes. According to CNN Money, there is no specific law to restrict such uses. Moreover, there is no legislation to ban the misuse of ITINs to get mortgages. Recently, the demand for undocumented mortgages have increased. This is why some lenders want to exploit the situation for their selfish gains.

Borrower Identification – The ITIN way

Illegal immigrants workers wish to buy homes to consolidate their residency in the country. Again, these workers don't have proper Social Security numbers or visa.

One of the most lucrative and the easiest ways to do so is to own a home through mortgages. To fill in that gap, undocumented mortgages have come to their rescue. Illegal immigrants use the Income Tax Identification Numbers or ITIN, to qualify for the undocumented mortgages. ITIN allows the workers to pay their taxes for the income they are receiving. It doesn't provide any kind of access to the government's social welfare services. The ITIN is a reliable source of information for the lenders. It helps them to verify the homeowners' details and even complete their mortgage underwriting processes too.

Controversial story of the undocumented mortgage

Controversy has always been the twin brother of every good thing in life. The same is true here as well. According to many financial experts, undocumented mortgages would add fuel to the fire. They'll ruin the already fragile society of the country. Such mortgages will encourage rogue behavior. For example, a culture of lawlessness will thrive. This will especially happen amongst illegal citizens. But, some lenders view that undocumented mortgages will help people who don't have anywhere to go. Such a mortgage has given them a ray of hope to many wannabe homeowners. Other lenders view that these rogue people will become good community in the future. So, why not give them some of the benefits of a regular US citizen?

Actually, it is the ITIN on which hinges the lifeline of the undocumented mortgages. The Internal Revenue Service permits a tax-payer to get the ITIN. This person can have the number without proving his/her immigration or residential status. People, opposing the origination of undocumented mortgages want the IRS to provide ITINs only after they've verified the residential status of the applicants. This way it'll put a stop to the distribution of undocumented mortgages.

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