If you’re a legal resident or nonresident foreign national working in the United States and hoping to set down some roots and perhaps buy your home, it would seem that there would be few obstacles in your way. After all, even if you were not eligible for a Social Security Number when you arrived in the country, you were certainly issued an Individual Taxpayer Identification Number in its stead. That ITIN was necessary for you to be able to work, drive, and enjoy many of the other benefits associated with living in the U.S. In theory at least, it should also be enough to enable you to get a mortgage for that home you want to buy.
Not so fast! The fact is that your ITIN may not be as useful for securing a loan as you had previously been led to believe. In fact, it may actually put you at a disadvantage with certain lenders. Despite your legal status in the country, lenders may be more cautious about your loan simply due to the way in which ITINs are issued to illegal immigrants.
Here’s the problem: though the ITIN was initially designed as a way for the IRS to deal with the taxable income of those who were not able to obtain Social Security Numbers, the program has since grown far beyond its initial mandate. It now is managed in a way that makes little distinction between legal and illegal immigrants and aliens, and that has resulted in heightened caution in the financial industry.
Here’s the problem you might be facing: because the IRS doles out ITINs to virtually anyone who can produce the required documents – or forged facsimiles even – there are an unknown number of illegal aliens who possess these numbers. Even though the operating premise with regards to home mortgages and the ITIN has long been that the ITIN is just as valid as a Social Security Number when it comes to obtaining loans, that is not always turning out to be the case.
The fact is that illegal immigrants pose a special problem when it comes to income verification, credit history, and verifiable documentation. In some instances, these individuals rely on falsified documentation to obtain loans and other benefits. That fraudulent activity has now become associated with the ITIN in some lenders’ minds. And since they feel that they cannot always trust the documents that ITIN-holders are providing them, they are understandably reluctant to proceed with some loans.
Now, none of this should dissuade you from pursuing a mortgage or other loan. Indeed, if you are here legally and have access to verifiable documentation and the appropriate level of credit history, then you should be able to secure the financing you need at the same terms enjoyed by other residents. At the same time, however, you should be aware that there may be a little more added scrutiny than you might have expected.