HUNTINGTON BEACH, Calif. -CU Members Mortgage has begun testing a pilot program that offers mortgages to undocumented workers in the Dallas/Ft. Worth area. The new product is called the ITIN loan, named after the IRS identification number that allows undocumented workers to pay taxes. CU Members is offering both a 15-year fixed loan, and a 5/1 ARM, with a maximum loan amount of $100,000. The new program was revealed during the company's annual Lending Conference. David Motley, EVP of Colonial Savings, parent company of CU Members Mortgage, explained that the growing number of undocumented workers in the U.S. has created a demand for the controversial product. "It seems to me we've got a large population of people who are working hard and spending money, and as long as they're paying taxes, perhaps they should have the same right to own a home as anybody else," he said. "Our stance is ultimately, these people aren't going anywhere, and if we agree that homeownership is good for our society, we need to find a way to get them into homes." While the loan features traditional fixed or adjustable rates and standard closing costs, the mortgage provider had to be creative when it came to developing credit-qualifying criteria. Because undocumented workers don't have access to many financial services, they don't have traditional credit histories that build FICO scores. Motley said credit qualification relies on history of checking accounts, payments on utility and phone bills, and even a history of regularly sending money back to family members still living in the applicant's home country. Proof of income is documented by IRS tax returns – at least one year of filing is required for the loan. Although the loan may seem riskier than those made to legal citizens, Colonial Savings President Jim DuBose said that isn't necessarily the case. "We know several other financial institutions that have been making these loans for awhile, and they've been performing well at high yields," DuBose said. "True, they are a bit riskier, but at the same time, we're wanting the other business from this market, and for your geographically based credit unions, it's an interesting market you should consider." Barbara Garcia, Vice President of Lending at Coast Hills Federal Credit Union in Lompoc, Calif., for one, is very interested in learning more about the loan program. "In Santa Barbara County, the majority of population is Hispanic, so we don't have a choice whether or not to market to this population," Garcia said. The VP continued, saying that the credit union does want to gain a larger Hispanic market share, and "documented or undocumented, we don't care – our community needs financial services and we want to provide them." Garcia added that in her experience, undocumented workers aren't any more of a credit risk than legal citizens; in fact, they are more likely to save for a down payment on a car and other large purchases. Motley said there is the potential for additional membership growth as a result of offering the product, because the Hispanic community tends to be a tight one, where neighbors share consumer experiences with each other. "By helping undocumented workers, you get exposure to documented workers, and there's a tremendous Hispanic market out there as a whole looking for financial services." Depending upon the success of the program during the next six months, Motley said the organization may expand the program to other areas of the country. Responding to a question from the audience, Dubose said CU Members Mortgage would consider offering the loans on a participation basis. "Sure, we'll consider looking at participation on these loans," he said, "whether credit unions want to buy a share of them, or the originating credit union wants to mitigate risk." -


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