Executive Summary: During this decade, illegal aliens were seen as the potential salvation of the already overheated residential real estate market.
Illegal aliens saw home ownership as deportation insurance and were all too willing to overpay for housing. A house would always increase in value and could quickly be sold in case of a return, voluntary or otherwise, to their home country.
Mortgage lenders saw no harm in granting mortgage loans to illegal aliens and other "subprime" borrowers because the house would always be worth even more if and when a foreclosure should become necessary.
Some mortgage lenders even partnered, voluntarily or otherwise, with ACORN (Associations for Community Reform Now) to increase their portfolio of subprime loans.
Mortgage loans were granted to individuals without Social Security numbers and little documentation. One bank allowed up to eight people to sign a single mortgage application.
Mortgage institutions knew that any mortgage to an illegal alien could be easily detected because an IRS-issued Individual Taxpayer Identification Numbers (ITIN) was used instead of a U.S. Social Security number. These lenders chose to forget that the IRS made no guarantees about the identities of these ITIN holders.
These risky loans to illegal aliens were not guaranteed by Fannie Mae and Freddie Mac, and now have dragged down large financial institutions like Citibank.