A couple of days ago we talked about how the IRS uses the ITIN, or Individual Taxpayer Identification Number, to tax undocumented workers. Essentially these workers will use a fake social security number to get employment by lying to one branch of the government and then supposedly use the ITIN to pay their taxes.

For those that follow the system some banks and Hannie Mae are working to enter them into the mortgage pool and let them use the ITIN as documentation of income. While I am less than thrilled with this, it is good for everyone to understand the methodology of the process if you are confronted with a buyer wanting to use their ITIN to get a mortgage.

Undocumented workers normally use an invalid Social Security number to obtain work. But they can pay taxes with a nine-digit alternative number that the Internal Revenue Service started issuing in 1997 to foreigners who aren’t eligible for a Social Security number.
The objective is to encourage all workers in the U.S. to file an income-tax return, regardless of immigration status. Banks, which normally use Social Security numbers to report income to the government, began accepting the individual taxpayer identification number from mortgage applicants in 2000.
ITIN-mortgage applicants are largely blue-collar, illegal-immigrant workers with only modest incomes. But they undergo more scrutiny — and provide more documentation — than candidates for stated-income mortgages and other subprime loans, for example. Most banks also ask applicants to show they have been filing taxes — with an ITIN — for at least two years. via WSJ.com.

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