Real Estate Blogging

Holden Lewis of the Orange County Register reported on 3/25/05 that many mortgage lenders are relaxing their rules to allow lending to immigrants – both documented and undocumented. According to the National Association of Hispanic Real Estate Professionals, “Undocumented Hispanic immigrants would take out an estimated $44 billion in mortgages if barriers to borrowing were lifted”. Many companies including Countrywide are developing loan programs that:
- Allow low or no down payment
- Supplement the credit record with “nontraditional” credit
- Recognize cash income and rent from housemates
- Permit the pooling of money for down payment and closing costs

What are the implications of such loan programs? Of course it will allow a growing population to enter homeownership - but what does this do for non-immigrant families? I think that these programs will make it even harder for non-immigrant families that are already being priced out of the housing market due to soaring home prices. How can a single family compete with these buyers in the housing market? A non-immigrant family would have to show traditional forms of documentation of their income, credit, and would not be allowed to pool numerous individual’s incomes to qualify for their mortgage.

On the flip side, what happens to these mortgage companies when a significant percentage of their borrowers are deported from the country or otherwise default on their mortgages? Even though they are paying a higher interest rate, the cost to maintain these loans and the liability could be enough to run a company down.