Illegal immigrants have cash for homes
Guest perspective: How a modern twist on Homestead Act could save housing
By Harold A. Justman, Thursday, April 17, 2008.Bookmarking Sites
Harold A. JustmanThe solution to the current real estate recession is as obvious as the noses on our faces. It is not loaning hundreds of billions of dollars to investment bankers. It is not more regulation of the capital markets. It is not offering new tax credits to home builders and home buyers. It is most certainly not engaging in demagoguery.
The solution is to offer qualified home buyers a green card for purchasing and living in a foreclosed home. This solution is like a modern day Homestead Act. And like the old western Homestead Act, this solution would unleash the economic power of some of the most industrious residents of America.
Illegal immigrants can be a significant source of money. According to reasonable estimates, illegal immigrants using bogus Social Security numbers pay about $6 billion a year in Social Security taxes. They also send billions of dollars back to relatives in Mexico.
Rather than export the dollars of industrious illegal immigrants we should use those dollars to buy and fix up run-down foreclosed homes. Clearly, many illegal immigrants have the skills to fix up foreclosed homes as evidenced by the fact that U.S. citizens regularly hire illegal immigrants to fix up and maintain their homes and businesses.
The reason that this solution is as obvious as the noses on our faces is that it has been around since 1776 when Adam Smith published, "An Inquiry into the Nature and Causes of the Wealth of Nations."
Smith observed that: "The annual labour of every nation is the fund which originally supplies it with all the necessaries and conveniences of life." The logical conclusion that Smith drew from this economic fact was that when a nation rewards labor it increases the national wealth. More to the point of this article is the observation by the professor who taught Smith as a student that: "Industrious foreigners should therefore be invited to us, and all persons of industry should live with us unmolested and easy."
More than 200 years of economic history in America has proven that a nation does not grow wealthy by exploiting labor but by exploiting markets. Today we are failing to exploit the market for homes by preventing a large pool of potential home buyers from buying a home. While no numbers are available as to the size of this pool of industrious illegal immigrant home buyers, the power law of distribution would logically lead one to believe that there are probably 2.4 million industrious illegal immigrants who could come up with a 20-30 percent down payment to buy a foreclosed home.
As a modern day political economist, Alan Greenspan has noted "... a market economy requires a critical mass of homeowners. ..." America needs to promptly increase the number of homeowners by offering green cards to qualified buyers of foreclosed homes. Unlike the solutions implemented by the Federal Reserve Bank and Congress, this solution will not cost hundreds of billions of dollars. In fact, this solution will unleash billions of dollars into the home-market economy.
And by rewarding those who have labored industriously and saved enough money to make a down payment on a foreclosed home, we will reignite an increase in home values. As home values rise, property values will once again exceed the amount of loans against the homes and the capital markets will be able to sell home mortgages again in the secondary mortgage market.
Of course, the most difficult part of any plan is the details. The green card home buyers program should be available only to those who have worked in America for five years or more. Clearly, in order to qualify for a green card when purchasing a foreclosed home, those with serious criminal records should be disqualified. Also, significant down payments should be required. Certainly 20 percent or more of the appraised value would be an appropriate down payment. Income verification will present a problem in many cases but should be required.
Most importantly, licensed real estate mortgage brokers will be the critical link between industrious illegal immigrants and home ownership. Mortgage brokers can provide the confidential and safe forum for full disclosure between the industrious illegal immigrant and the lender in the home-buying process.
The federal government's immigration department, known as USCIS, will need to publish clear guidelines to mortgage brokers and lenders as to what steps will qualify the industrious illegal immigrant who is buying a foreclosed home for a green card. Probably the most difficult part of this plan is getting USCIS to act quickly and promptly on all applications for a green card submitted in connection with the purchase of a foreclosed home.
While some will raise concerns about the risk of terrorists obtaining green cards, common sense tells us that suicide bombers are not likely to be homeowners. The comfortable hope of owning a home is not the emotional trigger to a bombing. Naturally, USCIS can continue to perform background checks after the close of escrow inasmuch as the new holder of a green card will have a permanent address and can be easily located.
But it is important to remember that the key to reigniting the single-family home market and the value of homes is a clear, safe path to a green card for the industrious illegal immigrant. Fortunately, real estate brokers, mortgage brokers and lenders have demonstrated a remarkable ability to make the dream of home ownership come true year after year after year. This could be the year that America lets industrious illegal immigrants bail out the real estate market for all of us.
Harold A. Justman is a practicing real estate lawyer in San Mateo, Calif. He is also the editor of The Robert Bruss California Real Estate Law Newsletter and regularly serves as an expert witness on the standards of care of real estate brokers.
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Submitted by Jillayne Schlicke on April 17, 2008 - 2:21pm.
From a business ethics perspective, this seems like we are using the illegal immigrant as an object to help maximize profits for corporations and prop up house values.
Consequences: we are rewarding illegal immigration, which would theoretically lead to more illegal immigration.
Harold, why not offer this program to LEGAL immigrants? Oh, wait a sec. We already have programs in place for that.
It would seem that rewarding illegal immigration would only compromise the integrity of the LEGAL immigration system.
If illegal immigrants have so much money, then why are so many of them receiving reduced-fare school lunches, free English lessons at school and free medical care from the United States?
I'm as liberal as it gets here in Seattle but my J.S. Mill and Kantian perspectives are outweighing anything Smith or Greenspan would have to say.
Submitted by Carlos Quan on April 18, 2008 - 7:24am.
Just to have the record straight...
most of this reduce lunches goes to US Citizens(the chidren of ILEGAL inmigrants...just like every other inmigrant that came to USA just that back in the old days there were no greencards.)
and usually dependending in where do you live you will get this medical care.
Most of this LEGAL inmigrant already have homes.
I dont believe they should be offer a Greencard just for buying a home..but they should have the opportunity of doing it.
I would not concentrate your efforts in what kind of free Education this ILEGAL inmigrants get becouse at the end of the day this will benefit the country...becouse most of the children of this ILEGAL inmigrants will remain in the USA...they will Married USA Citizens and will become productive...Worst thing we can do in the USA is to create a second class society
and keep your future people ignorant.
Having non documented inmigrant buying a house it is a great idea.
Submitted by David Podgursky on April 18, 2008 - 8:12am.
I don't know what "illegal" means when the Statue of Liberty is a carved in stone invitation for Immigrants to make their way here. It is a 20th century invention that we had to put up an armed guard and say NO ENTRY. Let's not forget that only a few of us are Native to America...ALL of our lineage at some point is foreign born... even the Native Americans migrated here eons ago.
There are a lot of Immigrants that have been fighting the system for a long time now trying to get their Green Cards legitimately.
They have:
- Spent thousands of dollars in legal fees,
- Stayed in this country despite wives, children, and parents being left behind for years
- Built lives
- Given to their communities
- Been better "Citizens" than many of the natural born Americans!
I am a first generation American and I believe it is part of the fabric of our culture to accept Immigrants whole-heartedly...
But there has to be a limit to "free passes"...
So what? Someone comes here with enough cash to buy a house... that's qualifying them and giving them a VIP pass to go ahead in line in front of people that are being patient?
On top of that... most lenders will not lend to them without a proper Passport and Visa. No visa, then no loan! So they're going to have to come here with cash!
How many illegal immigrants come with that much cash? And if they pool their funds so they can buy a cheap cheap foreclosure home for cash, which one gets the green card? what if they're all on title??
And honestly... isn't this in direct violation of The Patriot Act???
Flawed legislation like all the rest but it still has its place.
Submitted by alejandro becerra on April 18, 2008 - 11:42am.
Certainly, a novel idea that merits consideration if only because it recognizes the strong market potential of immigrants and, by extension, minority groups. The New York Times magazine as early as a year ago warned that this market is the one to be tapped effectively if we are to have a thriving housing sector in the future. The idea also offers a powerful solution to the dire economic conditions resulting from the subprime crisis that has not only affected the general economy but caused much unemployment, particularly in the construction sector where many of these immigrants have been working and earning relatively good wages until now.
Submitted by Adrienne Felton on April 19, 2008 - 10:17pm.
It's tragic that despite the economic hemorraging currently underway as a result of greed on the part of investors and politicians who pass, but do not enforce our laws, nothing has been learned. Millions of illegal immigrants are walking away from homes they have already destroyed by substandard "add ons" designed to hide still more illegal immigrants (not even family members--merely tenants). Still others are "moving up", and will destroy yet more housing stock because they have opted to live outside of the culture they claim to love. Whole communities of single family homes now require rehab loans, and without it will remain vacant and deserted. One million or more homes were purchased between 2004-2006 by illegals using tax IDs instead of social security cards, or with phony social security cards. Consequently, there is no record of their foreclosure in their name, so they will again buy and when it suits them--walk away. I have spent the last month looking for a decent house for legal Americans, only to find properties and whole neighborhoods destroyed by this wanton desire of lenders willing to place "now" money ahead of sound financial investing and patriotism. The values of legal homeowners left behind is now diminished. Meanwhile our promising and young are fighting and dying a world away, as the back door to this country remains proped open, and all the rights and privileges of citizenship are enjoyed by people who turn away from our values--refuse to learn the language, and openly and ARROGANTLY DEMAND rights they have not, and will never earn while undocumented. And they have the nerve to call us racists! As for the rest of us legal citizens who file taxes, the government regularly uses the paper trail we provide to hound us to the grave.
Only in America can two illegals create a legal citizen that taxpayers must educate, house, clothe, and provide medical treatment. Only here are we required to pay for shelters to house illegals from the sun and rain, while we educate their children to take our children's jobs. Only here are our laws used to defeat US. Only here do legal immigrants have the right to harbor illegals without penalty. Only in America is it legally required that information published by the government and businesses be provided in the language of one group of immigrants (legal and illegal who refuse to learn English), to the exclusion of all other immigrant groups. Uneducated Vietnamese, Italian, German, Polish, African, Irish, Korean, and refugees from many other countries came here legally, knowing not a word of English--but have learned it and never asked for special treatment. Beyond this, we have an illegal population that has no regard for green living, or planned parenthood that is now the largest "minority" in this country, and is growing by half a million a month.
In the face of all of this, the sell-out mentality to scoop up cash from illegals, ostensibly to "save" the housing market, has found the light of day. If this comes to pass, we will lose our souls, our pride, and our country.