NCPA - National Center for Policy Analysis


July 20, 2005

The Federal Deposit Insurance Corporation (FDIC) is encouraging banks to lend to underserved markets, regardless of a borrower's immigration status. As a result, banks are now competing for the illegal immigrant population, which totaled about 10 million people last year, says the Wall Street Journal.

Foreigners who are not eligible for Social Security numbers can use IRS-issued Individual Taxpayer Identification Numbers (ITINs) to obtain loans, which the IRS began issuing to illegal immigrants in 1997. About 8 million ITINs have been issued by the IRS as of December 2004.

Mitchell Bank, located in Milwaukee's South Side, an area that has seen a recent influx of Hispanics and illegal immigrants, is representative of this new trend:

  • In four years, Mitchell Bank has issued about 100 home loans, mainly to illegal immigrants, and says it has never experienced a default; it has recorded two late payments.
  • The average household income of borrowers is $30,000 annually, for mortgages ranging from $30,000 to $100,000.
  • Thanks to its outreach to Latino immigrants, including many illegal ones, Mitchell Bank is recording 4.5 times more transactions and at least that much more traffic at its three branches than a few years ago.
  • It is looking for a site to open a new branch in nearby Waukesha, which has a fast-growing Hispanic population.

Banks in other states have expressed an interest in serving undocumented immigrants. But while the Wisconsin Housing Authority is actively promoting its immigrant mortgage program, state Republican Senator Glenn Grothman has introduced a bill to put an end to the loans, noting that it's indefensible to set up a program "to benefit people who have chosen to ignore...immigration laws."

Source: Miriam Jordan, "Banks Open Doors to New Customers: Illegal Immigrants," Wall Street Journal, July 8, 2005.

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