Immigration/Housing: An Industry Response To My Post
I received this response from a gentleman in Portland, Ore., to my previous poston housing and immigrtion. He happens to be a mortgage consultant. He's absolutely right. All of this seems to come right back to the lenders:
Good article, but neither you or the Washington Post went all the way and connected all the dots. Neither of you addressed how we qualified these borrowers for these loans. These undocumented workers were the poster children for sub-prime loans. When you have multiple undocumented income sources in the household, limited assets, and needed to qualify the borrower, the only programs available were the no down, stated income, stated asset, room rent, or ninja high ltv loans, the same loans that some commentators on CNBC have called "sub-prime slime". Add to that the programs the some of the major banks ( Wells and BoA come to mind) rolled out with no SS# required, or stated income "second job" and you had markets dependent on "grey money".
Look at the states (CA, FL, TX, NV) with the highest foreclosure rates and numbers of 2 and 3 year sub prime resets then look at the numbers of undocumented workers in those states and the size of their underground economies. Not only were the illegals building the houses, they were buying them using "creative financing." Correlate that with the employment numbers in construction, which has dropped very little during this mess, and one might conclude that the undocumented workers were not only the first ones laid off but the first ones in financial trouble on their mortgages. Unfortunately for these borrowers, the programs that they used to buy their homes no longer exist, and nothing being proposed on the Federal level addresses the undocumented issue.
If you want to get an idea of the magnitude of this issue, you might want to talk to mortgage brokers in those states and find out how large a percentage of their business was dependent upon this market. I have had conversations with account execs (from sub prime lenders that no longer exist, coincidently) that said when the Patriot Act was passed and we had to start verifying SS numbers, they saw business drop as much as 80% from some accounts. I, for one, would really be interested in seeing hard numbers rather than listening to annecdotal evidence.
Questions? Comments? RealtyCheck@cnbc.com