Posted on November 25, 2008 by Michael Fleishman

Arroyo Grande - The New Land Department

It has been interesting to watch the transition in the State Land Department, whose long-standing mission has been "to enhance value and optimize economic return" for the State Land Trust.  In practice, the Department has simply sold trust land to the highest bidder at public auction, which historically have been developers.  Despite ongoing attempts at State Land Trust reform through the initiative process, it seems that the State Land Department has slowly begun to internalize changes as to how state trust lands are to be managed.

The Town of Oro Valley's proposed annexation of nearly 9,000 acres of State Trust Land known as "Arroyo Grande" is a case in point.  On November 19, 2008,the Town of Oro Valley voted 6-1 to adopt a general plan amendment, which will allow the process to begin for the possible annexation of Arroyo Grande.

Arroyo Grande will likely be a proving ground for the future of how the State Land Department manages the state trust lands.  Various stakeholders already have been very active in the process.  Interestingly, while Oro Valley initiated the annexation discussion with the Department, Pima County has effectively dictated much of the development of the conceptual plan.  Pima County, who has been the prime orchestrator of the Sonoran Desert Conservation Plan, has been openly critical of Oro Valley's commitment to preserving open space.  Pima County Administrator Chuck Huckelberry recently sent a memo to Oro Valley Town Manager David Andrews expressing concern over the absence of wording in the general plan ensuring that open space in Arroyo Grande and a wildlife corridor are sold for below-market value for conservation purposes.  Despite Pima County's desire to purchase some 6,000 acres of the Arroyo Grande, it recently abandoned such efforts.

Oro Valley's Andrews recently responded to such criticism by stating that "The preservation of open space in perpetuity is a deal breaker for the town."  The next phase - the pre-annexation development agreement - will prove the most interesting as the stakeholders hammer out what actually will be included in the final annexation agreement.  Whether Oro Valley is truly committed to the same goals as Pima County remains to be seen.  Nothing better than watching jurisdictions joust. 

Tags: , , ,
Posted on November 6, 2008 by Michael Fleishman

Illegal Immigrants and The American Dream

Despite unending attempts to step the flow of illegal immigration to the United States through an increasingly militarized border, the mortgage lending industry was not about to pass up the chance to capitalize on the estimated 12 million illegal immigrants in the United States looking for their own slice of the American dream. 

Enter the "ITIN Mortgage."  During the expansion of the housing bubble, many lenders offered home-mortgage loans to undocumented immigrants without requiring Social Security numbers.  While lenders used to require a Social Security number and verified income, those requirements obvioiusly changed during the loose lending days.  Indeed, if lenders were willing to lend money to legal residents without a job or income (think "NINJA" loans), why not lend to people who are not even legal residents of the United States? 

As the lending industry loosened, lenders began allowing illegal foreign nationals to use a taxpayer identification number ("ITIN") to qualify for a mortgage.  The IRS issues ITINs to both resident and nonresident aliens so they can pay taxes.  Obviously, the U.S. Government is not going to pass up a chance to collect taxes from undocumented residents.  According to the Government Accounting Office, a significant number of the nearly 9 million holders of ITINs are illegal immigrants. 

Tim Sandos, President and Chief Executive of the National Association of Hispanic Real Estate Professionals estimates that since 2000, illegal immigrants have taken out more than $1 Billion in ITIN mortgages.  Interestingly, as National Public Radio recently reported, ITIN mortgages have on average out performed conventional mortgages.  In part this is due to borrowers putting 20-30% down on a mortgage.  More than can be said of most borrowers today.  Amazingly, it has been reported that ITIN mortgages have had a delinquency rate of one half of one percent, compared to 6.4% for all home loans.

While ITIN mortgages have been big business, the tightening credit market has necessarily impacted this area of lending.  Moreover, as the immigration debate has intensified, these mortages have come under increasing pressure.  Indeed, Tim Sandos, when he worked for Citigroup received death threats because he was working with illegal immigrants.  In 2007, Representative John T. Doolittle  of California introduced a bill in Congress that would prohibit financial institutions from providing home mortgages to anyone who lacks a Social Security number.  The bill, H.R. 480, would have amended the Truth in Lending Act to make ITIN mortgage lending illegal. 

Given the surprising stability of ITIN mortgages, lenders certainly are not inclined to shed these solid performers, but the political and credit climate is changing that.  Indeed, as recently reported in an Active Rain blog, Banco Popular, the largest niche provider of ITIN mortgages, will no longer provide such loans.  Perhaps the ITIN mortgage will disappear like the American Ninja. 

Tags: , , , ,