ROGERS : Mortgage loans for illegal aliens allowed but rare
Posted on Sunday, January 27, 2008
ROGERS — While Arturo Reyes Jr. sits in jail on charges of harboring illegal aliens, his wife and co-defendant, Silvia Reyes, is under federal detention at their home — a brick house with a soaring foyer and a soccer goal in the yard.
There’s also a hole dug for a backyard pool. That’s a project that may have to wait.
The Reyeses’ plans were upended last month when immigration agents raided the family business, Acambaro Mexican restaurants.
Prosecutors are not only mounting a criminal case but also moving to seize the Reyes home and other properties that they call the fruits of the illegal labor the Reyeses allegedly used in their restaurants.
Largely overshadowed: The bank that holds the mortgages. Arvest Bank, based in Bentonville, is one of few the banks in Northwest Arkansas where an illegal alien can hope to get a home loan.
The Dec. 10 raid at Acambaro restaurants in Washington and Benton counties rounded up 19 illegal aliens for deportation and landed the Reyeses and two Acambaro managers in jail on charges that they knowingly hired illegal workers.
Arturo Reyes Jr. has pleaded innocent to a three-count indictment alleging he harbored and shielded illegal aliens by providing them with financial support through employment. Reyes also is charged with money laundering. He is scheduled for trial Feb. 25 in U. S. District Court. Silvia Reyes has yet to be formally charged.
LENT $ 2 MILLION The family’s $ 460, 000 home in a gated neighborhood in Rogers stands as the most obvious symbol of the wealth that prosecutors allege the Reyeses accumulated by exploiting illegal workers. The U. S. attorney’s office in Fort Smith contends the Reyeses should forfeit the house, the lot next door and nine other properties, including restaurant buildings and a warehouse, because “they were used in the commission of, or are properties which were derived from and represent the proceeds of, the concealing or harboring of an alien or aliens.” While an employer who hands an illegal immigrant a paycheck risks 10 years in prison and the loss of his property for harboring an illegal alien, a bank that lends an alien the money to buy a house and settle down in the country is well within the law.
Arvest lent the Reyes family more than $ 2 million for houses and restaurant properties that government prosecutors are now moving to seize, mortgages on file at the Benton County courthouse show.
In each case, the bank made the loans to Arturo Jr. and Silvia Reyes, who prosecutors have identified as illegal aliens, the documents show. Nearly all of the mortgages also name family patriarch Arturo Reyes Sr. and his wife, Seraf ina Reyes, both legal U. S. residents. The note for the vacant lot next door to the Reyes house was signed by Arturo Reyes Jr. and Silvia Reyes alone.
Arvest is one of a small number of banks that make mortgage loans to customers who don’t have Social Security numbers and thus could be illegal aliens, according to an Arkansas Democrat-Gazette survey of 26 banks operating in Washington and Benton counties. The two counties are home to most of the state’s Hispanic immigrants.
Arvest Bank Group Inc. spokesman Jason Kincy declined to discuss the Reyes mortgages, saying he couldn’t discuss a customer’s business. But he said mortgages extended to borrowers without Social Security numbers make up a “very small” portion of Arvest’s mortgage portfolio and that the bank complies with all federal rules on mortgages. “We’re well within the regulations to make those loans,” Kincy said. Of the 18 banks that responded to the newspaper’s survey, only Arvest and ANB Financial in Rogers said they don’t automatically disqualify borrowers who cannot show a valid visa or other proof of residency.
TAX ID MORTGAGES Instead of the usual Social Security numbers, banks may make the loans on the basis of an Individual Taxpayer Identification Number. The Internal Revenue Service issues the nine-digit taxprocessing number to individuals who don’t qualify for Social Security numbers but earn income in the United States. It’s a way for the federal government to collect taxes from them.
Some banks make mortgage loans to customers with Individual Taxpayer Identification Numbers, and some do not. In Northwest Arkansas, banks that make the loans take various approaches.
“We do not offer ITIN mortgages except in very, very rare cases,” said Terry Francisco, a spokesman for Bank of America. “Let’s say someone is a French citizen, and they want to buy a second home in the U. S. We might consider that,” he said.
At Regions Bank in Little Rock, Keith Smith said a borrower who can show legal residency can get a mortgage under a taxpayer ID number.
“We have a product, a portfolio product that is called a ‘foreign-national loan program, ’” Smith said. “As long as a the consumer has a work visa, which means, generally speaking, that they’re not going to have a Social Security number, then we do have some ways,” Smith said. “But you’ve got to show a work visa.”
Most banks surveyed said they do not make mortgage loans to customers without Social Security numbers. A few, such as Priority Bank, said they haven’t adopted a policy because no one has ever showed up wanting such a mortgage.
A handful of banks didn’t return calls inquiring about their policies.
At First Security, based in Searcy, vice president Kathryn Sims said the mortgage department once made the loans but gave up because they weren’t worth the trouble.
“We made them for a very short period of time,” she said, “and then they were just so complicated that we just decided we didn’t know enough about them and we needed to get out of them.
“ We may have made one or two, and then discovered just how much was involved with them,” Sims said.
Such mortgages make up a tiny share of the mortgage market, bankers and regulators say.
Banks typically don’t promote the loans, which can be contentious.
Critics said the mortgages encourage illegal immigration, and banks should stop making them.
“It’s been illegal to hire undocumented workers in the U. S.,” said Bob Dane, spokesman for the Federation for American Immigration Reform. “But under the current laws, it is not illegal for a bank to provide a mortgage. But that doesn’t make it right, and it doesn’t mean that the practice is helping us get illegal immigration under control.”
At the Center for Immigration Studies, which favors less immigration, spokesman Bryan Griffith said the bank rules don’t square with the nation’s efforts to round up and deport illegal immigrants and arrest employers. “It’s a mixed message,” he said, adding that the same conflict applies to cities that issue business licenses to illegal aliens. “Basically what the government says is, once you get through the border control’s buffer, you are very unlikely to be caught. You can get a job, you can get a bank account, you can get a mortgage and never be caught.”
‘ AN OPTION’ Bankers and bank regulators say it’s not their job to enforce immigration laws. Arvest, owned by the Walton family of Bentonville, is only following a path that federal banking laws and regulations plainly set out, Kincy said. He said the bank’s policy is also in keeping with its efforts not to discriminate.
“We don’t have an aggressive push to go after those loans,” he said. “But as customers come to us, that’s an option we can provide.”
Arvest requires that borrowers meet the requirements of IRS information-reporting regulations, he said.
Asked if the bank would make a mortgage loan to a borrower who openly disclosed he was an illegal alien, Kincy said lending money to illegal aliens wasn’t the goal of the bank.
Arvest’s mortgage applications ask prospective borrowers to check “yes” or “no” if they are a legal U. S. citizen or a permanent resident, he said.
He added, however, that “loan requests may not be denied solely due to a person not being a U. S. citizen or a resident alien.”
ANB Financial, formerly known as Arkansas National Bank, has a similar approach. The bank originates Individual Taxpayer Identification Number loans under a program offered by Bank of Bartlett, a Memphisarea bank that aggregates and services such loans, said Mary Alice Granata, vice president of real-estate operations for ANB.
She said ANB follows the guidelines for the Bank of Bartlett’s program, which aims “to help America’s immigrant and un-banked populations attain home-ownership.”
Under “Eligible Borrowers,” the guidelines list only “nonpermanent resident aliens” and “citizens and permanent residents” — people in the country legally. But the guidelines add that “proof of legal residency is not required.” Granata said ANB has made only “three or four” mortgages under the program.
LOANS ACCEPTABLE Kevin Mukri, spokesman for the U. S. Comptroller of the Currency, which regulates federal banks, said they are well within their bounds to make mortgage loans to illegal aliens. “The bank does not enforce immigration policy for the United States,” Mukri said. Although the USAPATRIOT Act requires banks to “know their customer” and verify IDs, it specifically authorizes the use of either an Individual Taxpayer Identification Number or a Social Security number, he said. It’s wrong to assume that everyone showing up for a loan without a Social Security number is an illegal alien, Mukri said. “Some people for religious reasons won’t have a Social Security number,” he said. “Some are on student visas.”
One reason more banks don’t make mortgage loans to those without Social Security numbers has nothing to with immigration. The loans aren’t easy to sell. “There’s virtually no secondary market,” said Anna Paulson, a researcher in the Federal Reserve Bank of Chicago’s Center for the Study of Financial Access for Immigrants.
Fannie Mae and Freddie Mac, government-sponsored companies that buy mortgages to help the market work, won’t buy such mortgages, Paulson said.
At Springdale-based Legacy National Bank, Ray Segura, vice president of lending, said he was discouraged by the high interest rates typically charged to such borrowers.
“I don’t believe in gouging people’s eyes out,” he said.
Segura said his bank had an interest in making the loans but couldn’t find an investor to buy them.
Arvest, the state’s largest bank and No. 1 mortgage lender, keeps 98 percent of the mortgages it makes, so it doesn’t face that obstacle.
No one answered the door of the Reyes home on a recent afternoon, and an attempt to secure an interview through an intermediary failed.
The mortgage documents show that Arturo Reyes Sr., Serafina Reyes, Arturo Reyes Jr. and Silvia Reyes took out a $ 418, 500 15-year mortgage on their house in Rogers in June 2006.
Arvest charged an initial rate of 8 percent, well above the national average of 6. 3 percent for 15-year fixed mortgages at the time, according to Freddie Mac.
After five years, the rate was to reset to an adjustable rate floating above an index based on U. S treasury prices. A cap set the maximum rate at 14 percent.
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