In an unusual business quirk, home loans to illegal immigrants have been found to be solid even as subprime mortgages to legal U.S. residents are shaking the financial markets globally.
Also known as ITIN mortgages because they are made to those with a Individual Taxpayer Identification Number, most of these mortgages are taken out by Hispanic illegal immigrants who lack a Social Security Number.
As a story in today’s Wall Street Journal (subscription required) notes, illegal immigrant mortgages are a bright spot in an otherwise gloomy mortgage scenario:
For loans more than 90 days in arrears, ITIN mortgages have a delinquency rate of about 0.5%, according to independent estimates. That compares with 1% for prime mortgages and 9.3% for subprime mortgages extended to those with spotty credit histories.
According to the WSJ, Texas, Illinois, Georgia, Wisconsin and Indiana are the leading originators of ITIN mortgages.
But with the residential construction business slowing down and raids on illegal immigrants intensifying across the U.S. lately, the ITIN mortgages could come crashing down on the banks. If that happens, it would increase foreclosures and further depress the real estate market in the U.S.