New Mortgage Bill Proposes Making Social Security Numbers Mandatory
New legislation on Capitol Hill may curb a popular mortgage concept: providing home mortgages to people using only their Individual Taxpayer Identification Number in lieu of a Social Security number.
Taxpayer numbers are issued by the Internal Revenue Service (IRS) to assist immigrant workers who do not qualify for a Social Security number - but do have taxable income - to report their income and pay federal taxes.
According to syndicated columnist Kenneth Harney, who reports weekly on home loan and housing issues, dozens of banks around the U.S. have begun offering mortgages to undocumented immigrants using taxpayer numbers, but their programs generally have been low-key and small in volume.
Bank of America stirred controversy earlier this month when it announced a pilot program in Los Angeles to provide credit cards to resident alien customers who lack Social Security numbers but have taxpayer numbers.
Some critics charge that the bank was seeking to profit by helping illegal immigrants who should be deported or prosecuted, not extended consumer credit. The mortgage company said its program is legal and may be rolled out nationwide if the pilot is successful.
But now, a bill has been introduced in U.S. Congress that would prohibit financial institutions from providing home mortgage loans to anyone who lacks a Social Security number.
The bill (HR-480), introduced by Rep. John Doolittle, R-Calif., would amend the Truth in Lending Act to make mortgage lending using taxpayer numbers illegal. Doolittle’s office released a statement that said in part:
“The government should not be creating incentives to encourage illegal behavior. Nor should companies be permitted to reward individuals in clear violation of our laws.”
Proponents of mortgage lending to buyers based on taxpayer numbers say Doolittle has it all wrong. Tim Sandos, president and CEO of the National Association of Hispanic Real Estate Professionals, said the bill would be disruptive and affect far more people than illegal immigrants.
Sandos estimates that there are as many as 7-8 million resident aliens in the United States who do not have Social Security cards, but are in some phase of the immigration process leading to citizenship. That process can take years - often more than 8 years - and “now these people are working here, earning incomes, paying taxes, contributing to the economy.”
Geoffrey Cooper, director of emerging markets for MGIC Investment Corp., a major private mortgage insurance firm, said lenders in roughly 40 states are already making mortgages to customers using taxpayer numbers.
Cooper said his company’s program was initiated at the request of community banks and other lending institutions that found that many of their customers who lacked SSNs, but had solid stated income, stable employment histories and excellent payment histories on debt obligations.
Home buyers with home loans obtained with taxpayer numbers “perform like ‘A’ credit borrowers,” said Cooper, and they qualify for MGIC’s most favorable insurance rates because they are so dependable.
Janis Bowdler, senior housing policy analyst for the National Council of La Raza, a Hispanic advocacy group, said that the home buyers who use taxpayer number mortgages should be seen simply as “hardworking, taxpaying families who want to participate in the American dream.”
Sandos noted that making Social Security numbers mandatory to complete a mortgage application could affect the ability of Asian, European, South American and other investors who simply want to buy a house in the United States for periodic visits but not full-time residency.
SOURCE: San Francisco Chronicle