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There is a major dialogue going on in Congress and the country surrounding what to do with Deferred Action for Childhood Arrivals (DACA), but what about other immigrants who arrive legally? Do they have full access to all we have to offer?
They face major challenges in tasks we take for granted, like getting a cell phone, a credit card or a mortgage. Why? Because they have no established credit profile or score here in the US. How many people can get a mortgage without a credit score?
As of 2016, there were almost 44 million immigrants in the US. That’s almost 14% of the population. Quite a bit of potential for homeownership and mortgage lending.
Many of these immigrants come to America seeking better opportunities. They have assets and a good income. But, they lack a US credit history making it extremely difficult to get housing and financing.
There are now companies out there working to create an immigrant’s credit profile using their foreign history, similar to a traditional US credit report. It’s being used by some property managers to help qualify new immigrants for rental housing. Why not use it for mortgage financing?
It is estimated that there were at least 10 million people who came to the US legally over the past decade who would be considered prime or even super-prime borrowers by US credit standards. Lenders need to find ways to provide them home financing.
Maybe it’s new products from Fannie and/or Freddie. Maybe there should be special placement, private pools made up of such loans, priced for the risk. Maybe a combination. Opportunity exists.
Where there’s risk, there’s reward. It’s a matter of how to best match the two. Let those much more qualified than I figure out the best ways to find a market for these loans.
One challenge is the ‘Know Your Customer’ rules for financial institution lending. These require the lender to obtain documentation, such as a driver’s license, or some other acceptable document, to validate the borrower’s identity.
This could be accomplishable using the borrower’s legal immigration status documentation. Where there’s a will, there’s a way.
Such products could prove very beneficial to banks. Many of these immigrants are financially sound, bringing their assets with them to America. This presents a source of new deposits and borrowers who can qualify for loans at higher interest rates.
Maybe it’s time to expand the credit box outside the US. To develop programs and products to service the needs of those who come to our country legally to seek a better life.
All we need do is find them housing…
