Despite Illegal Status, Buyers Get Home Loans

So far, the trend has begun slowly in California: Only about 50 houses and condominiums have closed escrow.

One obstacle is the same as that facing any buyer in the state -- high costs.

Many illegal immigrants cannot make the down payments or prove they earn enough to pay a mortgage in the state's pricey markets. Those who have been able to find affordable homes have bought in places such as Bakersfield.

"It hasn't been as successful as we expected it to be," said Felix Harris, Los Angeles program manager of ACORN. "The prices keep escalating."

Another factor is the lenders' low profile. Citibank, for example, has been offering loans to illegal immigrants in California under a pilot program since September. But it has not advertised widely and wouldn't discuss details with a reporter. It has relied largely on ACORN and individual immigrants and real estate agents to get out the word.

"Citibank is the largest financial institution in the world," said Gary Acosta, a co-founder of the Latino real estate group. "They are interested in the business opportunity. They think it is the right thing to do. But they are probably not interested in getting involved in the public debate that's taking place right now."

Acosta said that also, the bank probably wants to test the loans before advertising and opening the floodgates.

The lenders' reticence means some real estate agents don't know that the loans are available. Victor Campos, a real estate agent in San Fernando, said he often turns away illegal immigrants.

"As far as we know, if they don't have papers, the lenders won't even touch them."

Some banks are reluctant to take the risks involved in the illegal-immigrant market. "If someone were to get deported, what happens?" said Cynthia Mendoza, an account executive with Bank of America. "It's a loss to the bank."

In addition, large underwriters such as Fannie Mae and Freddie Mac aren't buying the loans, so the banks must keep them. A spokesman for Fannie Mae said the company recently reviewed its policies at the request of several lenders but decided not to make any changes, citing "complex and evolving" U.S. immigration laws.

But other financial institutions say the risk is worth taking.

They are being urged on by one of the nation's chief banking regulators, the Federal Deposit Insurance Corp. Eager to guard against predatory lending practices, the FDIC is encouraging banks to reach out to the Latino population -- both documented and undocumented. The loans based on tax identification numbers are one way to do that.