Filene Report Summary: New Insights on ITIN Lending as a Driver for Growth

September 25, 2023

Filene Research Institute recently released a new report with updated data based on their initial 2018 ITIN Lending Implementation Guide prepared in collaboration with ViClarity, Inclusiv, Coopera and TruStage.

This report highlights current data and insights on Individual Taxpayer Identification Number (ITIN) lending programs in credit unions, along with testimonials that show internal growth and community development opportunities. Not only do these programs seek to reach underserved communities, but they are also critical to a credit union’s continued growth and longevity. ITIN lending creates a low-risk, long-lasting relationship between credit unions and community members who do not currently have a social security number.

The report describes the policies and procedures needed for a proper ITIN lending program and the growth that credit unions can experience from these programs.

Overall Findings

Seventy percent of the credit unions interviewed by Filene said they are implementing an ITIN lending program, expanding their ITIN lending offerings, or have established ITIN lending programs. While most credit unions provide a variety of lending services, community participation among underrepresented groups is low. Many organizations have not considered the unique marketing, service and compliance considerations specific to ITIN lending. 

Serving Multicultural Consumers

The report showed that a vast majority of the individuals meant to benefit from ITIN lending come from countries with Spanish as the official language, and U.S. labor force growth is estimated to come primarily from Hispanic and Latino/a populations.

This distinction helps to identify where wires may be getting crossed with potential members and how valuable it is to have staff who can communicate with and understand the life experiences of current and prospective members.

Three Stages of ITIN Lending

There are three stages to ITIN lending: preparing, implementing and growing. These stages may look different for each credit union, but the research and development can apply to any organization looking to get started.

Preparing

ITIN lending doesn’t require separate policies or procedures; it often is about broadening and extending existing loan products and procedures to account for and include members with different circumstances such as an ITIN. To prepare an ITIN lending program, a credit union needs to:

• Identify any needed adjustments to their compliance program (such as broadening acceptable forms of identification and training staff)
• Understand the community it plans to serve
• Create a holistic framework that is culturally relevant (such as ensuring the availability of bilingual staff and creation of culturally appropriate marketing and product designs)
• Plan with leadership for implementation strategies

Not only are there specific procedural policies to consider, but a credit union must also work to build trust with potential program participants and ensure board member support. Building trust means being active and engaged in the community. Neglecting community outreach could harm the effectiveness of an ITIN lending program — it’s an essential step.

Implementing

To begin implementation, an organization should:

• Build community outreach activity
• Ensure the existing lending products meet the needs of the community and make adjustments as needed
• Ensure access to the same rates and fee structures, as well as broad underwriting available to every applicant
• Review community needs and state laws to identify where translated content would be beneficial

This stage brings several obstacles and roadblocks that can keep an ITIN program from flourishing, but by supporting underwriting, completing referrals for secondary market ITIN mortgages, understanding fraudulent activities, hiring staff that mirrors the community, and researching compliance policies, a credit union can overcome those obstacles, moving toward the financial growth opportunity and differentiation strategy that comes from a “people helping people” mission.

Growing

After tackling implementation in one lending product, a credit union can begin to offer more services and products to ITIN members, partner with organizations to purchase excess ITIN loans, bolster community outreach and financial literacy, and extend products to complement ITIN loans.

Getting the most out of an ITIN lending program means shifting organizational culture to become more inclusive, understanding and compassionate. Many individuals who participate in ITIN lending face obstacles that bar their access to quality financial services, but creating relationships within the community can help to remove those challenges and reward a credit union with increased membership and low-risk financial growth. One credit union reported their ITIN portfolio grew from $640,000 in 2019 to a staggering $5.3 million in 2022.

Read the full report here or consult this ITIN Lending Implementation Guide for additional resources.