Despite Illegal Status, Buyers Get Home Loans

FDIC officials predict that despite the slow start, the loans will take off in California, with its huge illegal-immigrant population.

"It happened in Chicago," said FDIC spokeswoman Linda Ortega. "And it will happen in Los Angeles."

One bank that has gotten into the market is Fifth Third Bank in Cincinnati. "We recognized it as a business opportunity," said Bill Schumer, a vice president of marketing at the bank. "It's appealing to a market that is growing dramatically."

Fifth Third Bank started issuing the loans in November after hiring bilingual loan officers. The bank is reaching out to customers through churches and community organizations.

One of those customers, Gerardo Vega, bought a three-bedroom home in Indianapolis.

"I feel like I deserve to have a house because I do what everybody else does," said Vega, an illegal immigrant who installs drywall for a living. "I pay my taxes."

In Northern California, real estate agent Morlet has helped four undocumented immigrants buy homes legally. Morlet, a U.S. citizen originally from Mexico City, said he understands his clients' desire to own property in the United States and to buy it through legitimate lenders.

"I live in an area where a lot of people get [defrauded] by people who don't have any scruples," he said.

Now that loans are available, Morlet faces the challenge of finding homes his customers can afford. When he comes across a deal, he must work hard to beat other bidders. The mortgages take much longer than average and require several more steps.

But his clients, Morlet said, are willing to wait.