Some lenders in search of business during the mortgage market’s holding pattern are turning attention to a niche product with millions of prospective borrowers.
Community banks, credit unions and other originators have a surging appetite for Individual Taxpayer Identification Loans, or ITIN products. The loans are easy to complete, relatively safe, and can deliver higher yields for mortgage players if a company is ready to step into the space.
The conversation around ITIN loans picked up earlier this year, experts told National Mortgage News, as origination volume continued to nosedive.
“It seemed like every other conversation I had was about ITIN loans and I think what was probably driving that was yield,” said Brian Simons, president of fintech Maxwell. “ITIN loans carry a higher coupon. People were looking for yield as interest rates were going up, so that’s probably what began to drive the conversation.”
Lenders characterize ITIN borrowers as hardworking people from a wide variety of backgrounds who are dependable borrowers. An institution opening its doors to them brings multiple benefits.
“If you are able to do one or two of these ITIN loans and gain their trust, you will get grandparents, aunts, uncles, cousins, their business too,” said Andrew Stachak, vice president at First National Bank of America. “Because they trust you. You earn Realtor trust as well.”
National Mortgage News spoke to veterans of the ITIN lending space about the product, its possible risks, and what lenders need to know before getting into the space.
