Jose wanted to buy a house in Northeast Philadelphia to stay close to family, but he couldn’t afford one, and as an undocumented immigrant without a Social Security number, he had limited options for lenders who would give him a mortgage. He turned to a Philadelphia community development financial institution, which worked with him and his wife as they saved for nearly three years and gave them a loan for their house.
“I’ve never seen anyone prouder at their closing,” said Frederick Rivera, assistant vice president of lending at Community First Fund, who withheld the homeowner’s last name to protect his identity.
Community lenders sometimes can be the only option for immigrants without Social Security numbers who want mortgages. But a new federal policy opens the door for certain immigrants brought to the country illegally as children to access federally insured loans to become homeowners and build wealth for themselves and their families.
On Jan. 19, the Trump administration got rid of a rule that barred the roughly 700,000 recipients of the Deferred Action for Childhood Arrivals (DACA) program from being able to get mortgages insured by the Federal Housing Administration. In the Philadelphia metropolitan area, 4,300 people were enrolled in DACA as of December 2019.
FHA loans are the type most first-time home buyers use because credit, down payment, and other requirements generally are more flexible than for conventional loans backed by private lenders. For this reason, providers of FHA loans also are more likely to accept home buyers of color, who through decades of discriminatory governmental policies have less wealth overall than white home buyers.
Since 2003, Federal Housing Administration guidelines stated that people without legal residency in the United States were ineligible for mortgages insured by the agency. But last week, the U.S. Department of Housing and Urban Development explained that the guidelines “did not anticipate a situation in which a borrower might not have entered the country legally, but nevertheless be considered lawfully present.” That’s the case for immigrants who came to the country illegally as children and have been accepted into the DACA program that former President Obama created through an executive order in 2012. Trump’s deputy secretary of HUD said the department was changing FHA guidelines “to avoid confusion and provide needed clarity to HUD’s lending partners.”
The Trump administration stopped allowing new DACA applicants in 2017, but the U.S. Supreme Court ruled in June that the administration could not end DACA.
N.J. Sen. Bob Menendez, a Democrat, had pressured the Trump administration to end the discriminatory policy and make federally backed mortgages available to DACA recipients. Menendez, fellow Democratic N.J. Sen. Cory Booker and others introduced a bill last year to make this change law. The bill is part of President Joe Biden’s immigration plan.
Community First Fund, which merged with community lender FINANTA last year, offers loans and financial counseling to people without Social Security numbers but who have tax identification numbers and want to buy a home. After the housing crash in 2008, lenders tightened their requirements and fewer of them offer mortgages to people with tax identification numbers, Rivera said.
He said roughly 90% of his clients over the last two years were immigrants, “people that have excellent income, savings, are very hard workers, have been filing tax returns for more than 10 years, contributing to the community, but have been constantly turned away by traditional lenders.”
“These are clients that if it weren’t because they were an immigrant or had an [individual taxpayer identification number], the banks would embrace them,” he said. “Just about every client we assist in buying a home has been turned away or declined multiple times by other lenders.”
Community First Fund handles about 25 loans per year. Its mission is to expand home ownership to help families build generational wealth and “be part of the fabric of our community,” said Daniel Betancourt, president and chief executive officer.
“Sometimes these systemic barriers are in place that don’t allow that,” he said. “There’s a lot of families that aren’t getting a mortgage because they’re not U.S. citizens.”
Will González, executive director of Ceibas, a coalition of Latino community-based organizations in Philadelphia, said allowing DACA recipients to access FHA loans opens a door to home ownership for those immigrants and also to immigrants who are not in the program. If DACA recipients can get loans from traditional lenders, community lending organizations have more funds to distribute to others who have nowhere else to go for loans.
“If you wanted to define the American dream, a home is part of that definition,” González said. “So this is great.”
The Philadelphia Inquirer is one of more than 20 news organizations producing Broke in Philly, a collaborative reporting project on solutions to poverty and the city’s push toward economic justice. See all of our reporting at brokeinphilly.org.