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January 26th, 2009 by Temple City Tribune
Recently, I received copies of articles written in the Los Angeles Times and Pasadena –Star questioning, with the emphases being, how an illegal could purchase a property. There was no question included with those articles, so I must assume that is what the writer was asking – “How can an illegal purchase a home?”
I made a number of calls and sent E-letters to various loan brokers, lenders, and to some banks, but received very little response. I am not a reporter, have no credentials from any media that would assist me towards obtaining information from these lenders, so I must depend on voluntary cooperation.
About six-years ago, approximately 52-percent of the population owned a home. Some were still making payments, with an extremely small number that were having financial problems, but we still consider that to be home ownership. Lenders decided that a great form of income came from interest earned on home loans. Home ownership also provided an increase in property taxes, which benefited state government; and with the help of Fannie Mae and Freddie Mac, lenders looked the other way as to who were obtaining those crazy loans. There was no one overseeing who really qualified, and since the loans were being insured by these agencies, lenders looked the other way and just preceded to give-away our future.
In some ways I cannot really blame the smaller banks, as they would give the loan to the home buyer and then sell the loan to a larger institution. For doing so they (the original lending bank) would be receiving a commission from the larger lender who bought the loan from them. There would be additional bonuses if there were a prepayment penalty on the loan, just one way for the original lender to earn additional commissions. There are so many perks for the original lender that I could not write fast enough to get them all down.
I was surprised to learn that certain conditions do exist, currently, for illegal’s to obtain home loans. The lender that I spoke to said, “No way for me to list them all”, so I must assume that such loans are still given. “It is not that they’re illegal, it’s that they are legal under certain conditions” is how it was explained, he continued to say, “What used to be very common is called a Foreign National Product. Depending on the type of visa a person has determines the loan that they are eligible for”.
Over the past year, this program has changed dramatically. Now, for an illegal to obtain a loan the amount is limited from 45 to 55-percent of loan to value (LTV). There is one bank that seems to have a good program, or product as it is often called, for making such loans, and is currently still doing so.
Here are some other ways that an illegal could possibly have purchased a property. 1) The home is bought in someone else’s name, of course this could be considered as fraud. 2) Another way is for the illegal borrower to have a co-signer who is legal. 3) There was a point in time that all a person needed was a tax ID number, and that one major bank may still be doing those types of loans. 4) Finally, a lender told me that he had heard of illegal aliens buying a home and using their child’s social security number, if the child was born in the U.S., and if they had a valid number.
This may not have answered the Pasadena’s reader’s question, but it is the best I can do at this time. You may ask why I am not including the name of the bank that seems to consider this to be a good product for them, simply because I cannot get them to respond to my call, and the information given came from loan brokers. So until I am able to confirm from this bank that they have and still are offering these programs, it is best not to mention any name. At the same time I would like to obtain complete details of the program.
SOME MORE QUESTIONS:
Q) We are in the process of losing our home, and we are considering doing a “Short Sale”. A family member has offered to purchase the property from us under the “Short Sale” process and allow us to live in the property. We think it’s a good idea, is it?
A) Yes, if you don’t mind committing fraud. This is illegal and if found out by the lender, I am certain that they will proceed with such charges. To be certain, why not check with your attorney?
Q) We are purchasing our first home. Other than being able to deduct the interest payments, are there any other benefits?
A) Yes, in fact this could be your prime reason for buying a home right now. This is only good for first time home buyers, as Congress has come up with a very novel way to help the first-time home buyer afford the down payment on a home.
For home purchases made after April 8, 2008, and before July 1, 2009, a first-time home buyer can receive a refundable tax credit equal to ten-percent of the purchase price of the home but capped at $7,500 ($3,750 for married taxpayers filing separately).
To make certain this credit is not used by wealthy taxpayers the credit is phased out for individual taxpayers with incomes between $75,000 and $95,000 and for jointly filing taxpayers with incomes between $150,000 and $170,000.
Your CPA, accountant or tax advisor is the best one to call, as there is much more to the condition. One final thing, the credit is not allowed for nonresident alien taxpayers, homes that are financed with tax-exempt mortgage bonds, or property purchased from a related party. There are also special rules to deal with divorce, casualty losses, involuntary conversions, etc. I do have a one-sheet bulletin received from a CPA, but it’s hard to read, but if you want a copy, drop me a note and it will be mailed to you.
Louis Perlin CRS, GRI is a Syndicated Writer, Author, Professional Real Estate Witness and Mediator. Lou can be reached by calling Marilyn Perlin Realtors, Inc., at (760) 327-8401 or by E-mail: email@example.com