Alternative Underwriting

Illinois Governor Rod Blagojevich went off the deep end on Sunday when he announced an Opportunity I-Loan mortgage loan program for illegal aliens.

The state-backed mortgage loan program is aimed at making home ownership more accessible to first-time buyers, regardless of immigration status.

The move comes as a similar year-old program in Wisconsin is coming under fire for offering loans to undocumented immigrants. A bill that would end that program is under consideration.

Meanwhile Sen. Bill Brady (R-Bloomington) said in a statement that he will introduce legislation next month to prevent any citizen-financed program that supports mortgages for illegal immigrants in Illinois.

"We need to protect our taxpayer dollars," said Brady, a candidate for governor, in a statement. "Using tax resources to make state-guaranteed mortgage loans available for undocumented workers is wrong, plan and simple."

Under the Illinois plan, called Opportunity I-Loan, borrowers with little or no credit history, no Social Security number and no bank account are eligible for fixed-rate 30-year home loans.

"Buying a home is a key first step for many working families to start realizing the American dream," Blagojevich said in a statement. "Our new program helps families build equity and security for their future, it protects them from predatory loans and it will help thousands of families across Illinois build better lives."

The program, announced after Sunday services at New Zion, is to go into effect Monday, officials said.

The plan was lauded by politicians and community leaders and greeted with nods of affirmation from some of the 200 people in the audience.

So far, seven lenders in the Chicago area are qualified in what officials call "alternative underwriting," though more around the state are being trained, said Bryan Zises, director of public affairs for the development authority.

The maximum loan is 97 percent of property value if the borrower makes a 3 percent down payment, officials said. Eligibility limits based on income and property value vary, depending on whether the property is in a federally designated "targeted area."

"This program is not a set-aside or a giveaway of any kind," said Kelly Dibble, executive director of the authority. "Instead, this program addresses the barriers that create unequal access and unnecessary discrimination."

Can someone please tell me why a state strapped with cash flow problems should possibly be offering 97% mortgages to illegal aliens? For that matter why should there be state backed 97% mortgages for anyone, illegal or not? Plain and simple: Government has no business selling bread, orange juice, or mortgages.

The bottom line is politicians want to use taxpayer money to guarantee loans to people that should not be here in the first place. The ownership society is bad enough, but this carries insanity to a whole new level. Illinois has simply gone mad.

Mike Shedlock / Mish
http://globaleconomicanalysis.blogspot.com/