Many of us will be surprised to know that illegal immigrants are able to purchase car insurance or take out a mortgage. Don’t they need a Social Security number for that? Aren’t banks worried about losing their money? What can the Department of Motor Vehicles (DMV) be thinking when it helps people who have broken U.S. laws obtain car insurance?

There are many questions, and we will answer them in order. Let’s start with bank loans (mortgages).

Small banks have been pioneers in offering credit to undocumented immigrants, seeing this as a way of stimulating the real estate market in their localities.

“Buying a house is part of the American Dream," said Timothy Sandos, president of the National Association of Hispanic Real Estate Professionals (NAHREP). "Unlike borrowers who were born in the United States, these people will bend over backwards to make sure that they do not lose their property."

Many owners of real estate agencies are convinced that immigration reform will happen. They also believe that mass deportation is not possible.

“We have observed that the government clearly wants to integrate the undocumented into this country’s economic life," stated Robert Baird, who heads the Bank of Bartlett in Tennessee. “There just are not enough human and financial resources to deport 12 million people.”

Mr. Baird’s bank was one of the first to offer mortgages to undocumented immigrants two years ago.

“We follow this policy because we consider it to be right, legal, and very profitable,” he said.

According to Sandos, the first credit institutions to gain an edge in the real estate market for undocumented immigrants will reap huge profits.

“Two years ago, 216,000 undocumented immigrants borrowed money totaling $44 billion," he said, citing statistics compiled by his association. "This year these figures will grow to 375,000 borrowers and $85 billion.”

Large financial services companies that have answered Sandos’s call include Citigroup, Inc., Wells Fargo &Co., Fifth Third Bancorp, The Bank of America, and Deutsche Bank AG, which works closely with the Hispanic National Mortgage Association.

The Wall Street Journal recently reported on how J. P. Morgan Chase &Co. has developed an experimental program, which it intends to test in Maricopa County, Arizona, home to Phoenix.

Many articles can be found online by opponents of undocumented immigrants that criticize banks and real estate agencies for their “affairs” with those who live in the country illegally. But these affairs are accepted and even approved of in Washington.

“Three years ago,” recalled Baird, “I participated in a conference in Chicago where bureaucrats from the Federal Reserve System (FDS) and the Federal Deposit Insurance Corp. (FDIC) spoke in support of offering various services to undocumented immigrants.”

The FDIC did not deny these comments, but its press secretary Robert Mooney did offer a clarification. "We did raise the issue of offering services to undocumented immigrants, but we did not say anything about offering mortgages to them.”

I foresee the question our readers will ask. How can banks extend mortgages to undocumented immigrants, who lack Social Security numbers?

It’s true that many immigrants who are here illegally do not have this number, but an Income Tax Identification Number (ITIN) can also be used to get a loan from a bank. An ITIN is only issued to undocumented immigrants who can prove that they need it to pay taxes. A copy of a tax declaration must be submitted with the W-7 form, which is used to request an ITIN. A W-7, or Application for IRS Individual Taxpayer Identification Number, may be requested by phone at 800-829-3676 or at www.irs.gov/pub/irs-fill/fw7.pdf .

Undocumented immigrants have to pay a higher interest rate than U.S. citizens or legal residents. This rate is calculated not according to credit history (the undocumented simply do not have one), but according to the applicant's work history.

Are banks taking too big a risk in working with the undocumented?

“If foreigners who are in the United States illegally fall into the hands of the government, it will not be easy for claim-holders to get their money back,” said Joseph Arpaio, sheriff of Maricopa County.

Real estate agents, however, maintain that undocumented immigrants who are deported can sell their real estate or that their relatives who are here legally can continue to pay off the mortgage.

Baird says that none of his clients have been deported. Although raids on businesses employing undocumented immigrants have become more and more frequent, a negligible number of illegal immigrants has fallen into the hands of Bureau of Immigration and Customs (ICE) agents. ICE spokesperson Temple Blake has admitted that his agency has still not taken a position on financial institutions that lend money to the undocumented.

Mr. Blake may be dodging the question. An inquiry at the bank would be all it would take to catch the undocumented at work or at home. But you can bet, and I will, that a team will not be sent from Washington to catch them.

Moving on to car insurance.

After 9/11, states that had previously never prohibited the undocumented from obtaining drivers licenses began to do so. So now a significant number of the undocumented are not able to renew their licenses and thus lose their car insurance.

But many small- and medium-sized insurance companies have put two and two together and concluded that now is an excellent time to start working with this niche market.

Many states that prohibit the DMV from issuing licenses to the undocumented do allow them to purchase car insurance. This is where brokers find their opportunities.

“Business has gone through the roof,” said Brian Daffy, head of the California insurance company Alliance United, in an interview with the Wall Street Journal.

The public has reacted in different ways to the initiative that Daffy and his colleagues have shown. While those against any loosening of the rules for the undocumented are fiercely opposed to what insurers have done, motorists and representatives of law enforcement agencies have supported the insurance industry's moves. The undocumented may lose their licenses, but this measure will not force them to give up driving, which is one of their main sources of income.

Police officers from all over the country have seen hundreds, if not thousands, of cases where undocumented immigrants without car insurance have fled the scene of an accident, even abandoning their cars so as to avoid meeting police officers. In such cases as these, the cost of car repairs falls entirely to law-abiding drivers.

But everything changes if the undocumented purchase car insurance. Although it is illegal to drive without a license or with an expired license, violators usually get off easily. The most important thing is that they have registration and insurance.

One of the markets that brokers are targeting is people who have licenses issued by their native countries. Sometimes it is enough for a foreigner to have a passport or ID issued by their consulate (like the Mexican matricula consular card).

According to the Insurance Research Council (IRC), every day over 15 percent of drivers in the country take to the road without insurance. The IRC does not know how many of them are undocumented.

“We believe that any person living in this country who drives should have insurance,” stated a representative from the Texas Department of Insurance in an interview with the Wall Street Journal.