Nearly a quarter-million Hispanic households could become homeowners if undocumented immigrants had greater access to the mortgage market, according to new research released Monday in Denver.

The study by Rob Paral and Associates found that more than 600,000 illegal Latino households have the age characteristics to buy houses and more than 700,000 have the incomes necessary to buy modest places.

Of those, more than 216,000 could become owners if they had improved access to the home buying process, said Paral, adding that as a group, they represent $44 billion in mortgage originations.

The research was commissioned by the National Association of Hispanic Real Estate Professionals and was released during the group's annual marketing convention.

Based in San Diego, the 12,000-member NAHREP is devoted to increasing the ownership rate among Latinos "by empowering the professionals" who serve them. About 1,500 real estate agents and brokers, lenders and vendors attended the conference.

The notion of allowing illegals of any nationality to become owners is highly controversial. Many people argue vociferously that undocumented immigrants are a drag on the economy because they hold relatively low paying jobs and should be booted out of the country, not given wider access to home loans.

But the study makes the case that the economy would benefit if illegal aliens were allowed to participate more freely in society, particularly by moving up from renter status to that of owner.

Immigrants would have a greater sense of security and could use their accumulated equity to open businesses, pay for big ticket items like automobiles and appliances, make improvements to their properties or send their children or even themselves to college, the report points out.

The projected flow of capital would impact the housing, real estate, financial services, construction, remodeling and retail sectors as well as increase the tax base in neighborhoods with high concentrations of immigrants, it says.

But Paral, whose report was performed outside his duties as a research fellow with the American Immigration Law Foundation's Immigration Policy Center, says "finding ways to permit ownership among the undocumented is not the same as calling for legalization."

While legalization "would be a powerful stimulus" to investment in housing among illegals, the researcher says, it is "not a prerequisite to increase their home ownership rate."

What is necessary, though, is greater access to banking in general and home loans in particular, the paper says.

NAHREP co-founder and chairman Gary Acosta says his group is "not taking a position one way or another with regards to amnesty" for undocumented immigrants.

"Rather, we are just trying to put the facts on the tables so they can be considered when and if policy decisions (regarding illegals) are made."

Acosta, a Southern California mortgage broker, remembers just a few years ago when translating loan documents into other languages was a popular cause among some people who thought immigrants should learn English rather than be allowed to do business in their native tongues.

"What changed opinion on that was economics," he says. "And in some ways, I believe that's what this issue will hinge on, too. As homeowners, these people would make cash registers ring all across America."

Currently, undocumented immigrants have only limited access to mortgages because they are largely an "unbanked" group who don't normally avail themselves of mainstream financial accounts.

But even though the lack of a banking relationship and a conventional credit record is no longer a prerequisite to obtaining financing, illegals are further constrained because they often don't have a social security number, or at least one they can call their own.

Without such an acceptable identification, the report says, the undocumented even have a difficult time opening accounts with their local water, gas, telephone or electric companies.

In some cases, so-called "thin-file" applicants who have little or no credit history and no social security numbers can obtain funding by using their consular identity cards as a form of ID or an Individual Taxpayer Identification Number. ITINs are issued by the Internal Revenue Service to persons who are not eligible for SSNs but still a need an identification for tax purposes.

ITINs may be used to establish credit for mortgage lending purposes because they show the income history of the applicant. But only a handful of portfolio lenders make those types of mortgages.

Mortgage Guaranty Insurance Corp., Madison, WI, is involved in an experimental ITIN lending program with the Wisconsin Housing and Economic Development Authority. But even that is controversial, with a high ranking Republican state legislator from West Bend calling for the agency to quit the pilot altogether.

"We have honest people waiting years to become citizens -- hard-working immigration employees protecting our borders -- and we're going to give low-interest loans to illegals?" Rep. Glenn Grothman told the Milwaukee Business Journal recently.

But even if ITIN lending proves successful, the report says, the capital available for loans to undocumented immigrants would not be enough to handle the demand unless the federally chartered secondary market institutions agreed to purchase loans originated by banks and other lenders.

Currently, Fannie Mae, Freddie Mac and Ginnie Mae will not buy loans to illegals, the study points out. "This seriously reduces the capital available for these loans as financial service institutions are reluctant to tie up their assets in too many loans that they cannot sell."

According to the study, there were nearly 1.5 million undocumented Latino households when the last Census was taken in 2000. And based on current ownership rates among Hispanics, it is estimated that almost a third may already be homeowners.

Paral further estimates that the target market among Latino undocumented households is 658,000. And based on based on income and age characteristics -- age 35 or older earning $30,000 or more annually -- he says 216,000 could become owners if they had legal status.

Published: October 6, 2004

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