With several federal programs already cut off, borrowers on an ITIN may see higher priced loans in the future
As deportations from the United States continue, ordered by the Trump Administration and carried out by the US Immigration and Customs Enforcement (ICE), a mortgage program for residents without Social Security Numbers may be in jeopardy.
Individual Taxpayer Identification Number (ITIN) mortgage loans have been used for borrowers who do not have access to Social Security but resided in the United States.
Alex Smith (pictured top), senior vice president and regional sales manager at Acra Lending, has heard rumblings regarding these loans and what the future for these borrowers looks like.
“I think everyone is waiting for someone else to make the first move,” Smith told Mortgage Professional America. “Without getting into a political discussion, the current presidential administration has made it clear that things like deportation are back on the table, much stronger than they used to be.”
The Trump administration has won some recent court battles in the effort to use the Alien Enemies Act for deportations. The most recent court hearing requires deportation targets to receive 21 days’ notice and an opportunity to challenge the deportation in court.
Non-permanent residents will be excluded from obtaining FHA loans starting May 25, despite pleas from the National Association of Mortgage Brokers (NAMB), which has asked the administration to reconsider this action, fearing it may harm housing activity.
Lenders face risk of having customers deported
The risk for lenders is potentially doing a mortgage loan for someone who might not be allowed to remain in the country for the life of the loan.
“Lenders run the risk that they write a loan to somebody that theoretically could be deported two months later,” Smith said. “I think some lenders may be tightening the credit box, and others are getting nervous, but they’re holding steady. Right now, our ITIN program is still here and it’s still thriving.”
“If I were a broker in the ITIN space, I would be making sure that I’m signed up to all the updates on that program, because I do suspect over the next couple of months there might be some shakeups in that market space.”
The Consumer Financial Protection Bureau (CFPB) is preparing to rescind 67 policy and regulatory guidance documents, including several related to mortgage lending, credit reporting, and consumer complaint processes.https://t.co/O9LdG6QRHi
— Mortgage Professional America Magazine (@MPAMagazineUS) May 15, 2025
Smith believes that even the large companies that invest a significant amount of money in the mortgage market might not have predicted how quickly this has happened.
“These hedge funds that buy hundreds of millions of dollars of loans, they’re run by some incredibly smart people who can forecast the future a lot better than you and I can,” Smith said. “If the administration continues doing what they’ve made clear they’re intending to do, it will present a different challenge that I don’t think the ITIN programs across the board have already accounted for.”
ITIN loans may start looking like foreign national mortgages
In addition to ITIN loans, many lenders offer foreign national mortgage loans. These are often investment properties, but can also be used for residential mortgages.
Smith believes that the pricing and qualifications for ITIN loans may begin to mirror those for foreign national loans if the Trump administration proceeds with deportations.
“A lot of lenders offer foreign national programs for people who aren’t even in the States,” Smith said. “Theoretically, there’s a pivot there that a lot of lenders could work towards. Generally, foreign national loans have lower loan-to-value (LTV) ratios and higher interest rates. The industry standard is around 80% LTV for ITIN borrowers and 70% for foreign nationals. Some vary, but those are common numbers.”
Over the next few months, Smith said he would not be surprised to see lenders attempt to mitigate some of the new risks associated with ITIN loans.
“In three to six months, maybe 75% LTV for ITIN might start being the new norm to account for that deportation risk,” Smith said. “I would be interested to see over the next three to six months where these ITN loans move and adjust to, for this new risk that previously wasn’t really on the table.”
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