Legal, Permanent, Non-Permanent..: Residency & Mortgage Lending

Who's the illegal alien, pilgrim?The topic of immigration reform is having a polarizing effect on the nation. It sparks interesting debate on both sides of the issue. I know, I know, my grasp of the obvious is legend! What isn’t quite as obvious is how it could have an effect on mortgage lending, specifically re-financing.

We know how FHA views insuring loans for lawful permanent and non-permanent resident aliens.

FHA Guidelines For Legal Permanent Resident Aliens

For people who have been granted permanent resident alien status, FHA will insure their loan under the same conditions as people who are US citizens. The lender is required to document that the borrower is a permanent resident alien in the loan application and evidence of permanent residency must be provided.

FHA Guidelines For Legal Non-Permanent Resident Aliens

FHA will even insure a mortgage made to non-permanent resident aliens as long as the borrower is going to occupy the property as their primary residence and the borrower has a valid social security number. If the borrower has less than one year of history of having their non-permanent status renewed, it is up to the lender to determine the likelihood that the borrower will be granted a continuation with the US Government. So as to the question whether or not a resident alien can receive FHA insured loans:

Yes, FHA will insure the loans as outlined above for both lawful permanent resident aliens and non-permanent resident aliens.

Yes, there are lenders who will loan money to lawful permanent or non-permanent resident aliens.

What About Illegal Residents?

This is a legitimate question that doesn’t seem to receive any of the media attention that swells around the bigger issue of illegal residents:

What about all of those people who financed homes with “fake” social security numbers in the late 1990′s or early 2000′s who are currently making their payments but cannot refinance due to the updated qualification verification?

I don’t have an official estimate, I would guess there could be many, many, many people who are currently residing in homes that were financed with dubious SS documentation provided to lenders prior to the current database verification process. This could certainly prevent them from being able to re-finance.