CNC Mortgage Blog

A letter written to Time:

Dear Time,

RE: Let’s get serious about housing, Time February 23, 2008

I would like to point out that there are two markets for houses that are closed at this moment and could generate an immediate volume of three to five million units. There are probably 12 to 20 million persons in the country who could move into their own homes quickly.

UNDOCUMENTED RESIDENTS

The political hot potato with illegal residents seems to have been put on the back burner by the Obama administration. If there are between 12 and 20 million illegal residents in the country they could buy between three and five million homes. Fewer and fewer banks are offering loans to this community with the Individual tax identification number (ITIN) so that market has also dried up.

Residency for these people and their families needs to be legalized. Farmers, builders and industry need that source of less expensive labor. Once it is legalized it will be less prone to be abused.

I can’t speak to other urban areas but the neighborhoods in Minneapolis and St Paul , Minnesota, that were depressed and have received large numbers of Hispanic immigrants are flourishing.

These potential customers could start to buy houses immediately. A down payment of 5% could be required, don’t be to choosy on finding the source for that down payment, accept and confirm their employment or income documents, accept income from boarders who could rent rooms in the house as contributing to the borrowers income and let these people buy houses. Initially they will move in to the most depressed, affected, less expensive neighborhood sand contribute to their resurgence.

FOREIGN NATIONALS

Foreign nationals are persons who live outside of the United States and would like to buy a second home in the US mostly to have a vacation home but, just in case, for safety reasons. These are people whose income and employment are outside of the country but could provide at least a 25% down payment on a home. Income and assets would be mostly documentable, credit scores would be meaningless and long time residence not possible. Fannie and Freddie had programs for them until last year but they removed them.

The market for foreign nationals would reactivate the real estate market in areas that are hard hit such as Florida and California. Mortgage rates in the US continue to be very attractive with rates of 6% to 7% on 30 year mortgages. I see some South American countries have rates of 18% on a 15 year mortgage with 30% down, even adjusting for exchange rate risks, that is very steep.