A bill introduced in Congress earlier this year by Rep. John Doolittle (R-Calif.) would require home buyers to have a social security number to obtain a residential mortgage for a primary residence.
The Doolittle legislation could derail the increasingly popular mortgage technique of allowing immigrants to use an individual tax identification number (ITIN) instead of a social security number to purchase a home.
ITIN loans are offered by many finance companies to undocumented immigrants who do not have a social security number. They can apply for the loans by obtaining an ITIN from the Internal Revenue Service.
The National Association of Hispanic Real Estate Professionals estimates that expanded use of ITINs could open up $44 billion worth of mortgages—much of it for first-time home buyers—business that would be lost if the legislation passes.
At press time, Doolittle's bill was referred to the House Committee on Financial Services, which is chaired by Rep. Barney Frank (D-Mass.).
Brian Jensen, district director for congressman Doolittle's office, says the likelihood is that the bill will be rolled into the general debate on immigration reform later this year.
However, Jensen says Rep. Doolittle introduced the bill because there is evidence that some people using ITINs are illegal immigrants.
“While it's [very difficult] to quantify the magnitude of the problem, the bill would only apply to people seeking a mortgage to purchase a primary residence,” says Jensen. “The bill would not affect foreign investors or the purchase of vacation homes,” he says.
Builder trade groups as well as the Hispanic Realtor group worry that the legislation could have unintended consequences.
“We have a lot of people in the Tampa Bay, Fla., area who come here from Canada to retire,” says Joseph Narkiewicz, executive vice president of the Tampa Bay Builders Association. “Does that mean they have to apply for a social security number or maintain dual citizenship to own a primary residence in this country?” he asks.
Tim Sandos, president and CEO of the Hispanic Realtors' trade group, says his concern is that millions of undocumented immigrants who are now paying taxes could be denied access to homeownership.
While he did admit that some immigrants with ITINs may have used a false social security number to originally secure work, Sandos says the bill unfairly penalizes people who have since reported their status to the government and are well into the citizenship process—a process that can take eight to 25 years.
Sandos says the issue surfaced when the Treasury Department's Office of Thrift Supervision (OTS) did audits and found that some customers using ITINs had used unauthorized social security numbers to find work. OTS then required the finance companies to file a suspicious activity report (SAR) with the Financial Crimes Enforcement Network, which makes the SAR available to the appropriate law enforcement agencies. A suspicious activity report can potentially subject an immigrant to a formal review that can lead to deportation by the Department of Homeland Security.
“This is completely unnecessary,” says Henry Cisneros, chairman of CityView and HUD Secretary during the Clinton administration. “We're seeing innercity neighborhoods revitalized by the entrepreneurial instincts of new arrivals who are turning around areas that haven't had new housing for 30 or 40 years,” says Cisneros, who adds that Doolittle's bill would stifle such efforts.
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