“Unlikely Mortgage Winner” from the WSJ

Interesting article from the WSJ (subscription) earlier in the month. The key sentence:

For loans more than 90 days in arrears, ITIN mortgages have a delinquency rate of about 0.5%, according to independent estimates. That compares with 1% for prime mortgages and 9.3% for subprime mortgages extended to those with spotty credit histories.

Other highlights from the article:

“Our default level is almost zero,” says Scott Hastings, director of marketing for Citizens Home Loan Inc., a Charlotte, N.C.-based lender that is active in 33 states. The bank has been originating ITIN mortgages for almost two years, and the loans now make up about 20% of the institution’s mortgage business. “It’s an absolutely promising market. These Hispanic families will pay their mortgage before anything else.”

A few months ago, Hispanic National Mortgage Association, a privately held company nicknamed “Hannie Mae,” began buying ITIN mortgages from lenders. Once it has bought the loans, HNMA packages them into securities for investors. HNMA, which is based in San Diego, puts the ITIN mortgage market potential at $85 billion. But it estimates that the niche market has generated only $2 billion in loans overall because relatively few banks offer them.

Despite the high-yield potential of ITIN mortgages, the majority of players in the ITIN-mortgage segment are small banks rather than large national institutions. Concern over the controversy that can erupt over serving the illegal-immigrant community is widely regarded as preventing big banks interested in the Hispanic market from joining the fray.

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