State Senator opposes WHEDA program
By COCO SALAZAR
1/13/2005

A Wisconsin government agency is conducting a pilot program to provide financing for undocumented immigrants -- and in the process has encountered strong opposition from a state senator who is drafting a bill to stop the program.

Immigrants who do not have the usual requirement to obtain a loan -- a social security number -- are able to use their individual taxpayer identification number through a program offered by the Wisconsin Housing and Economic Development Authority.

While many banks already finance ITIN-based loans, WHEDAs program is the first offered by any state housing finance authority, WHEDA spokesman Ron Legro told MortgageDaily.com in an interview. The loans are currently underwritten through six banks throughout southeastern Wisconsin and into the Madison area, where large Hispanic populations exist, that utilize the program and have the loans funded by WHEDA. Some of the banks were already issuing such loans prior to affiliating with the state agency.

"Illegal immigrants should not be getting a loan," said Wisconsin senator Glenn Grothman. It "seems ridiculous that we hire employees to enforce a law preventing people from entering this country illegally, its against the law for employers to hire illegal immigrants or they get fined or punished, but then the government turns around and says, 'Well we're going to give special low-interest loans that you or I can't get for these same illegal immigrants'...Its kind of a kick in the teeth to all those people who want to become citizens legally and are patiently waiting to say, 'Well for the people who are breaking the law, we'll give you a benefit.'"

The financial community has taken note that undocumented immigrants represent a large portion of potential borrowers. But, in many cases the lack of a social security number impedes their ability to qualify for a home.

"These folks are stuck with either not getting a house, or going into the underground economy, or even worse going to a predatory lender," Legro said. "We saw this was a large group being underserved by the private market, or badly served by it in most cases, or not being served at all, so we decided on the program."

While they may not be citizens, undocumented immigrants with a tax ID "work in this country, they pay taxes, they contribute to the society," he added.

In 1996, the IRS created ITINs when it discovered undocumented workers reportedly had $80 billion in annual income. The nation houses approximately 11 million undocumented immigrants, 70% pay income and payroll taxes, and 31,000 serve in the U.S. military, according to statistics Legro e-mailed to MortgageDaily.com.

Since the pilot program's start last April, 100 mortgage applications have been processed, with 43 resulting in approved loans as of the end of 2004. "It's a small portion of our portfolio in terms of our services," Legro said, noting that the housing finance authority funded a total $400 million in loans last year. The applications that have not resulted in mortgages are for the most part pending, others have been rejected, while others have expired.

WHEDA, which says it focuses on reducing costs of homeownership primarily targeting first-time homebuyers and lower-income people, uses tax-exempt mortgage revenue bonds to be able to fund the 30-year loans at lower than market, fixed, long-term rates. The Tax ID-based mortgage terms and requirements, such as a reasonable credit score, income below a cap set by HUD and purchase price limits, "are identical to what we offer the general mortgage borrower," according to Legro.

Mortgage Guaranty Corporation Inc., an insurer of WHEDAs tax ID-based loans, started insuring these types of loans last January. The private mortgage insurer said in an October announcement it was the first to provide a program for coverage on loans to immigrant borrowers with Tax IDs.

The insurance program "addresses the unique needs of the many immigrant families that have been living and working in the U.S. for five, seven, even 10 years or more without permanent residency status," MGIC chief executive Curt Culver said in the announcement. "They have truly come here to build a life for themselves and their families, and homeownership is a key part of that. We are a nation of immigrants -- that is our legacy and our future."

The National Association of Hispanic Real Estate Professionals is another supporter of tax ID mortgage programs for immigrants.

"We believe that these individuals have been unfairly left out of the process of purchasing a home," association chairman Gary Acosta told MortgageDaily.com. "They contribute to our tax system and should have the opportunity to participate in homeownership."

Senator Grothman believes programs like WHEDAs are incentives for people who break the law and are unfair for those who wait to enter the country legally.

"It's really a government-subsidized program for people that are breaking the law," Grothman said. "If we're going to have immigration laws, why would you set up a government benefit, I don't care what the benefit is, targeted for people who are breaking the law?"

Grothman noted that a bill to try to stop WHEDAs program is being drafted and anticipates it will probably be ready to be introduced in a few weeks.

WHEDA has not set a date to stop the pilot program as it seems to be working well, Legro said. "If these folks meet all of the standard requirements that go into our low-income affordable mortgage programs and the only difference is they don't have a nine-digit social security number, they have a nine-digit ITIN, then what we're saying is we'll give you a loan," he concluded

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