Well Fargo & Co. has become the first major California real estate lender to directly offer home loans to illegal immigrants and foreign nationals as a result of its new pilot program in Los Angeles and Orange counties.

The concept is gaining traction nationally, with a handful of U.S. banks eagerly selling the American dream of home ownership to an untapped market of between 10 million to 12 million undocumented workers.

Some undocumented workers and foreign nationals pay taxes in the United States but are not eligible, because of their legal status, to receive Social Security numbers, which are required for home loan applications. But Wells Fargo will begin accepting a different form of identification a nine-digit Income Tax Identification Number, known as an ITIN to allow these potential homebuyers to obtain home loans. The Internal Revenue Service issues ITINs to individuals who do not have a Social Security card, including illegal immigrants, for tax-paying purposes.

"These loans are highly controversial," said David Barr, a spokesman for the Federal Deposit Insurance Corp., which supervises the nation's banks. "Anything dealing with ITINs and immigration are two hot-button issues. But banks are offering these products."

Barr said banks have found "alternative ways" to allow undocumented immigrants and foreign nationals to apply for home loans. No government agency keeps tabs on how many banks are offering such products.

The potential for criticism hasn't dissuaded Wells Fargo.

"Law enforcement initially approached our company about these cards because the cash economy is dangerous," said Shelley Freeman, Wells Fargo's regional president in Los Angeles. "We're selling mortgages to taxpayers. We leave the government's job to the government."

Wells Fargo faced similar heat five years ago, when it began accepting "matricula" cards government ID cards from Mexico, Guatemala and Venezuela to open checking and savings accounts. A Wells Fargo spokesman called that program an "enormous success," citing 700,000 new accounts.

Wells Fargo further defends the home loan offers by citing the U.S. Patriot Act, which recognizes ITINs as well as matricula cards as acceptable forms of identification. Banks are not required to ask the residency status of customers.

ITIN mortgages received some legitimacy last year when the Milwaukee-based Mortgage Guaranty Insurance Corp., the nation's largest provider of private mortgage insurance, created what it calls "Building a Life in America" program mortgage insurance for first-generation immigrants, many of whom are in this country illegally, but want to own a home.

"It's a very niche market," aid Geoffrey Cooper, MGIC's director of emerging markets. "You do a loan here, a loan there. We haven't felt any backlash."

But in a state with ongoing and emotional immigration issues, the program has plenty of critics. Rep. Dana Rohrabaher, (R-Huntington Beach), calls the loan program bad business.

"People who are violating the law, whether they're illegal aliens or bank robbers, shouldn't be treated as any other customer," he said in a statement. "It is not good business for Wells Fargo or for any other company to do business with lawbreakers."

To qualify for Wells Fargo's Celebrate HomeSM program, a borrower must have paid their taxes for at least two years using an ITIN number, provide proof of residency for two years, and have had a bank account for at least six months. The program offers 90 percent financing on fixed and adjustable-rate mortgages for up to $600,000.

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