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February 17th, 2010

Should Illegals Be Kept Out of Mods?

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One lawmaker has proposed a bill that would prevent illegal immigrants from both issuing home loans as well as getting loan modifications. Representative Kenny Marchant’s (R-Texas) Mortgage E-Verify Act involves a web-based tool that could, according to Marchant, save millions of dollars each year that would otherwise be lost to mortgage fraud:

The E-Verify program is a voluntary, Web-based system run by the federal government to help businesses certify that potential employees are legally authorized to work in the United States.

According to Marchant, mandating the use of the E-Verify program to establish a homeowner’s legal status would help eliminate waste, fraud, and abuse, and bring integrity to the mortgage modification process.

The Congressman had this to say on his website:

“As a member of the House Financial Services Committee, I am happy to introduce my bill, the Mortgage E-Verify Act, which would require, as a condition for modification of a home mortgage loan held by Fannie Mae or Freddie Mac or insured by the Federal Housing Administration (FHA), that the mortgagor be verified under the E-Verify program. My bill will potentially save millions by cutting down on fraudulent claims from illegal immigrants and protect taxpayers from subsidizing the restructuring or renegotiation mortgages of illegal immigrants.

“E-Verify is a fantastic program which I have supported making permanent for employers. Mandating its use as a condition for home mortgage loan modifications would help eliminate waste, fraud, and abuse in the system and bring integrity to the process. In fact, the Treasury Department’s Financial Crimes Enforcement division (FinCEN) estimates that mortgage fraud increased 1,411 percent from 1997 to 2005. Furthermore, two-thirds of fraud reports in the last decade are due to falsified statements on loan documents. My bill would curb these abuses and protect the taxpayers.”

Illegal Loans?

You might be asking yourself, “How could an illegal immigrant get a legit home loan in the first place?”

“You have to remember that at their core, a loan is a private contract between two parties,” said HSH VP Keith Gumbinger. “As long as a borrower could prove to the satisfaction of the private lender that they could pay the loan, a transaction could occur. It’s not as uncommon as you may think.” Gumbinger goes onto explain that many programs and initiatives that promoted home ownership — dating back to the mid 1990’s — sought funding for affordable housing in many parts of the country where illegals held down jobs. Since loans were often sold to others and bundled into securities by Wall Street, these private deals may have ended up on any number of balance sheets, including those of Fannie and Freddie.

Political Influence

Just as the politics of affordable home ownership may have influenced the origination of these loans, we wonder if political influence can now prevent them.

The Taxpayer’s Problem

There’s taxpayer discontent over whether or not illegals should be allowed to attend state colleges, even if they express the ability to pay tuition. The problem, the critics say, is that state colleges — like federal loan modification efforts — are supported by taxpayers. Should tax dollars be used to support services for non-citizens?

Your Opinion

Should illegal immigrants be prevented from getting loan modifications, let alone home loans?

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2 Responses to “Should Illegals Be Kept Out of Mods?”

  1. Lucia Says: February 17th, 2010 at 2:31 pm

    “Should tax dollars be used to support services for non-citizens?” The issue is not about non-citizens, which includes legal immigrants and legal foreign visa holders, but it’s about risk and the burden to the tax payer.

    Illegal immigrants have broken the law by deception, bribes, and identity theft and have only a temporary stay here until the law catches up to them. What kind of risk do they make as a borrower? How many homes in California bought by illegals are now sitting vacant because jobs dried up or the wage earner got deported? What kind of burden do they pose to law abiding citizens? Should our country reward such flagrant disregard for our laws and tax paying citizens by helping foreign outlaws gain access to jobs, schools, medical services, and homes?

    By all means go ahead and feel sorry for the poor nationals who only want a better job. But don’t enable them to rob us of resources that are supposed to go for law abiding citizens and law abiding legal immigrants and foreign guests. Past presidents felt sorry for the third world economies south of our border and enacted NAFTA and the Free Trade Agreement, the success of which is another subject.

  2. Tim Manni Says: February 18th, 2010 at 10:35 am

    Hey Lucia,

    “it’s about risk and the burden to the tax payer”: You’re absolutely right.

    “How many homes in California bought by illegals are now sitting vacant because jobs dried up or the wage earner got deported?”: That’s a stat I surely don’t know, I assume it’s probably impossible to figure out. I would love to hear a ballpark number though.

    It’s a fact, people who live in this country that don’t pay taxes, yet benefit from taxpayer programs incur a real cost to this country, especially when it’s something like defaulting on a loan — especially at a time like this.

    Thanks for your comment,
    Tim

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HSH.com's daily blog focuses on the latest developments in the mortgage and housing markets. Our mission is to relate how changes in mortgage rates and housing policy, as well as the latest financial news, impacts consumers, homebuyers and industry insiders alike. Our 30-plus years of experience in the mortgage industry gives us an edge as we break down the latest changes in an ever-changing market.

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Tim Manni is the Managing Editor of HSH.com and the author of their daily blog, which concentrates on the latest developments in the mortgage and housing markets.

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