What are Illegal Immigrants with an ITIN exactly?

I heard on CNN (Lou Dobb's Show) tonight that banks, insurers and mortgage lenders target the business of undocumented illegal immigrants.

There is a profit to be made to offer loans and mortgages to illegal immigrants who want and can afford to buy a house in the US.

It may be against the law for the illegal immigrants to be in the U.S. or for an employer to hire them, but there's apparently nothing illegal about selling something to them.

I got confused and therefore wrote this diary. Forgive my English. I am no writer.

The IRS gives out "Individual Taxpayer Identification Numbers" to non residents, ie foreigners, who have a visa that allows a foreigner to work for the duration of his issued visa. They can file a US tax return with this ITIN number. ITIN are also issued to foreign investors, who never put their feet on US soil, soley for US tax return filing purposes. Up to here I think I understand what the ITIN is for (but fill me in, if I missed something essential, please).

It seems the IRS also gives out those ITINs to illegal immigrants, so that illegal immigrants can file a tax return.

I don't get it, how can an illegal immigrant, who is not allowed to work legally in the US, once he and his employere have "broken the law by hiring an illegal and the illegal working illegally" file a "legal tax return" for his illegal work and income?

Not that I would mind illegal immigrants working in the US and making a living (I admire their work ethics quite often), but I can't understand how the US laws can be so inconsistent.

The US profiles and categorizes people as illegal immigrants and as illegal workers, but at the same time make them legal taxpayers and use him as a legal for profit business targets, for exmaple in the mortgage industry.

Doesn't that mean that as soon as you give an illegal immigrant an ITIN and he pays his taxes on his income, that you admit him to be "as good as a legal immigrant"?

By finding ways to treat illegals like any other consumer, companies (and the state government supporting this - my added words here), are in effect legalizing -- and legitimizing -- millions of people, who technically have no right to be in the US"

says Business Week online here .

Isn't that completely nonsensical to call someone illegal and a non resident, but then give him legally a loan to buy land and house in the US to reside in it?  

Or could the illegals claim, they are in fact "legal"? Could they decuct a right to be considered legal, because they work, pay taxes, pay their mortgages and are a profit or an asset to the US economy?

I am not sure who profits from the loan business, if it's just the banks or also the state governments, because they seem to support the programs and it looks as if everybody profits from selling to illegal immigrants.

I also am not sure, if those programs are fair, helpful, smart or abusive. Basically I am completely at a loss to understand the issue and I have problems to put it in some ethical context I can live with.

I think it's somewhat all of the above, meaning

1.) it's a bit unfair to the legal residents, because they didn't break the laws and had to go through the hurdles of becoming an legal immigrant the old-fashioned way - they earned it in honesty.

2.) helpful and fair (in the sense of humane and civil) to the illegal immigrants,

3.) smart and pseudo(il)legal? for business purposes,

4.) legally abusive to the illegal immigrants, because they are handled as if they were legal, but are legally still categorized as illegal.

So, what is an illegal immigrant with an ITIN in reality?

And what is wrong with selling legally for profit to them, if everybody is happy about it?

Where do the Democrats stand on this issue?