Earlier this week Banco Popular the #1 provider of ITIN mortgages completely exited the ITIN mortgage market with the following announcement.
"Effective October 31, 2008, the Banco Popular Mortgage division will discontinue our mortgage lending programs. Because of continuing distress in the U.S. economy, Banco Popular will exit all niche business lines that are non-deposit generating operations. The restructuring plan is a direct result of the turbulent times currently faced by financial institutions. Streamlining operations will allow our parent company, Popular, Inc. to focus on increased profitability and lower credit costs.
Loan file submissions will be accepted until October 31, 2008. If you have a pending loan submission, the loan will need to close no later than November 28, 2008.
For more than two decades, Banco Popular Mortgage remained the preeminent ITIN and Foreign National lender in the Mortgage industry. We have valued your continued support and patronage. It has been a pleasure to serve you and your customers."
A check of the lenders that still offer the product finds that most are lending from 50% to 60% Loan to Value. Although still offered by a few lenders this effectively eliminates this niche product from the marketplace for all practical purposes.
One thing I have not seen much discussion on, so I will address it here, is the statement that the elimination of seller funded or Non-profit Down Payment assistance this effectively eliminates the ITIN consumers from the real estate homeowner marketplace. In short, NOT TRUE, Even if borrower's don't have credit they can still obtain an FHA loan with alternative credit references even if they have no FICO scores at all. However, to obtain an FHA loan you must have and Social Security Number (SSN).
The solution to most of not all of the issues for the aformentioned individuals and familes is to obtain a Social Security Number. Not only will this allow borrowers to obtain FHA, USDA or Conventional Loans but they will also be able to apply for the numerous down payment assistance programs still available that are completely free to all parties in the transaction. An example of a case that I'm working on now is that a single Mom with 4 children was approved for an FHA loan of 3% down. Unfortunately she didn't have the 3% down (soon to be 3.5% as of January 1, 2009).
She applied for and received down payment assistance of 12%. The resulting Mortgage and payments will be less than if she paid the 3% down herself. In addition when using these government down payment assistance programs the fees of the lenders are strictly controlled. It's a win-win situation for everyone:
- The government while giving the money to the borrower now has a new taxpayer
- the seller sells a house they otherwise couldn't have sold
- the buyer can afford a house they otherwise couldn't have afforded
- the lender gets a credit qualified borrower and is able to make a loan they otherwise couldn't have made.
Even if you are not a citizen you can still obtain a SSN. Info on doing so is located on the Social Security Administration's web site here.
In short, if everyone observes the laws then there are still plenty of loans to be had regardless of your situation. By working with a competent Mortgage Professional you can obtain loans that many people feel are no longer available.