Donald Trump, in a Thursday speech at the Economic Club of New York, announced his intention to outlaw mortgages for unauthorized immigrants.
Despite Trump’s claims that a “flood” of illegal immigrants is driving up home prices, the percentage of mortgages held by undocumented immigrants is negligible. Nevertheless, the policy would assist solve housing affordability.
A recent analysis from the Urban Institute found that out of the total number of mortgages granted in 2023, only around 5,000 to 6,000 were to individuals with Individual Tax Identification numbers. Foreign nationals without proper documentation can’t apply for Social Security numbers, thus they must obtain Individual Taxpayer Identification Numbers (ITINs) in order to file their taxes. Latin American countries account for the majority of ITINs granted.
According to Equifax, there were around 4.3 million first mortgages originated in 2023.
Despite the USA Patriot Act of 2021 allowing banks to recognize ITINs as a form of identification, it is frequently extremely difficult for undocumented immigrants to acquire home loans.
“A small yet growing set of lenders offer mortgage products to ITIN holders, often at higher interest rates and with stricter lending requirements, despite anecdotal evidence that this type of lending does not pose additional risk to the housing finance system,” the Urban Institute report states.
Abolition of cost-increasing restrictions and the release of certain government land for mass home development in low-tax, low-regulation zones were two of the ways the former president proposed to lower housing prices.
Mortgage costs would drop to 3% or perhaps lower as a result of dropping interest rates, he added, making financing a more attractive option for homeowners.
The effort to reduce housing prices may also be thwarted by Trump’s larger views on undocumented immigrants, as well as his determination to deport millions of them. In order to alleviate its labor shortage and build more homes, the residential construction industry has long advocated for a rise in the number of foreign nationals permitted to work legally in the United States. Rising home prices are mostly attributable to the chronic shortage of available homes, which has worsened in recent years in response to surging demand.
