International credit reports can help foreign workers buy a U.S. home

By Jeff Lazerson

12/14/17

What’s up with mortgage rates? Jeff Lazerson of Mortgage Grader in Laguna Niguel gives us his take.

Rate news summary

From Freddie Mac’s weekly survey: The 30-year fixed rate averaged 3.93 percent, one wobbly basis point lower than last week’s 3.94 percent. The 15-year fixed averaged 3.36, unchanged from last week.

The Mortgage Bankers Association reported a 2.3 percent decrease in loan application volume from the previous week.

Bottom line: Assuming a borrower gets the average 30-year fixed rate on a conforming $453,100 loan, last year’s rate of 4.16 percent and payment of $2,205 was $60 more than this week’s payment of $2,145.

What I see: Locally, well-qualified borrowers can get the following fixed-rate mortgages at a 1 point cost: A 15-year at 3.0 percent, a 30-year at 3.375 percent, a 15-year agency high-balance ($453,100 to $679,650 for loans funding after Jan. 1) at 3.25 percent, a 30-year agency high-balance at 3.75 percent, a 15-year jumbo (over $679,650 for loans funding after Jan. 1) at 3.75 percent and a 30-year jumbo at 3.875 percent.

What I think: What is an international credit report? And, why should you care?

It’s for foreign workers looking to buy a home for themselves and their families who have an H-1B visa but have not enough established credit in the United States. It can also assist foreign nationals who want to invest in U.S. residential real estate.

That’s another potential buyer for your home. That’s another potential opportunity for your neighbor or co-worker to plant local, more permanent roots. If you are an employer, it’s an inviting recruiting point.

And, you want to consider this if you only have U.S. credit and you are thinking about buying property in another country.

According to a National Association of Realtors survey, foreign investment in U.S. real estate skyrocketed between April 2016 and March 2017. Foreign buyers purchased $153 billion of residential property, a 49 percent jump from the previous year.

Union Bank of California, Wells Fargo Bank and Bank of America all accept international credit reports to some degree.

“In a global economy, U.S. companies often retain talent from other parts of the world who may want to purchase homes while they live and work here,” said Bill Bilicki, head of retail mortgage sales at Union Bank. “We wanted to provide a solution for clients in this unique situation who already have strong credit histories and income, but their only hurdle to homeownership is how long they’ve live in the U.S.”

Union Bank cited an international consumer credit report cost of $195 to its mortgage broker channel.

“Wells Fargo Bank accepts international credit reports on a very limited basis,” said Tom Goyda, Wells spokesman.

“We do accept international credit reports. However, in some countries there may be insufficient information and additional documentation from the applicant would be required,” said Bank of America spokesman Terry Francisco.

Freddie Mac does not accept international credit reports, according to Freddie spokesman Chad Wandler.

Fannie Mae will accept a foreign credit report, not an international credit report.

Angel Oak Mortgage Solutions accepts international credit reports for foreign national loans (foreign investors). That’s no Social Security Number or H-1B visa type borrowers.

This “helps us to determine trade lines,” said Eric Morgenson, Angel Oak’s director of business development.

What if there is an error on your international credit report and you want to dispute it?

Federal Trade Commission spokeswoman Nicole Jones cites the same Fair Credit Reporting Act requirements for all credit report disputes. That is, the credit reporting company and the information provider are responsible for correcting inaccurate or incomplete information in your credit report. Well, good luck with that.

The Consumer Financial Protection Bureau has not established specific rules or guidance related to the use of international credit reports, according to a CFPB spokesperson.

Several industry insiders explained that it’s up to the mortgage applicant to assist the credit reporting agency in pointing them to creditors in that country of origin.

The credit report will be more expensive and there will be more applicant work, but owning U.S. residential real estate has a pretty good track record for community connection and investing.

If you have questions or comments, please contact Jeff Lazerson by clicking here.