Did Undocumented Immigrants Commit Two-Thirds of Mortgage Fraud During the Housing Bubble?
No. But the idea is out there. Rep. Kenny Marchant (R-Texas) has proposed requiring Fannie Mae and Freddie Mac to verify that everyone receiving a home loan backed by them is of legal status. On the site America Speaking Out, where House Republicans lets users submit and vote on ideas for deficit reduction and general political priorities, Marchant (or, presumably, a staffer in his office) writes:
“„During the housing bubble, mortgage fraud was egregious. ** Over the last decade, two-thirds of fraud reports came from illegal immigrants who were approved for loans despite providing FALSE information (such as Social Security numbers and Individual Taxpayer Indentification Numbers). Due to the bailout of Fannie Mae & Freddie Mac, taxpayers are now subsidizing millions of dollars in fraud.** I propose we REQUIRE Fannie, Freddie and FHA – which handle 85% of the nation’s mortgage loans – to use E-Verify to ensure the legal immigration status of a borrower before originating, purchasing, or restructuring a home mortgage loan. Even if Congress fails to reform Fannie and Freddie, my plan – introduced as HR 4586 & HR 4744 – would save MILLIONS of tax dollars wasted in guaranteeing fraudulent mortgages, and would protect taxpayers from paying for mortgage adjustments of illegal immigrants.”
That some undocumented immigrants commit mortgage fraud seems right. That they commit two-thirds seems outrageously high to me. Undocumented immigrants do not buy that many houses, and mortgage fraud became rife in the run-up to the bubble, as lenders, particularly subprime lenders, nudged applicants for loans to fudge their own documentation or failed to follow-up on income statements. The paperwork got shoddy for everyone.
Marchand’s America Speaking Out post actually contradicts other statements of his, where he says that people falsifying documents or misreporting their income make up two-thirds of mortgage fraud — and that undocumented immigrants have in several states been accused or convicted of doing so. That, obviously, does not translate into undocumented workers committing more than 60 percent of the crimes. Still, the notion got legs on the internet, as have numerous other reports overstating the impact of undocumented workers on the housing bubble. For a thorough debunking, see the Southern Poverty Law Center’s post here.
