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Stated Income Loan 101

Dec 22, 2012 in Stated Income Loans | Comments Off

New Info on Stated Income Loans

A stated income loan is a mortgage where the lender does not verify the borrower’s income by looking at their pay stubs, W-2 (employee income) forms, income tax returns, or other records. Instead, borrowers are simply asked to state their income, and taken at their word. These loans are sometimes called liar loans or liars’ loans (often misspelled liar’s loans). Stated income loans were originated by Ameriquest.

Reasons for stated income loans

These loans are nominally intended for self-employed borrowers, or other borrowers who might have difficulty documenting their income. Stated income loans have been extended to customers with a wide range of credit histories, including subprime borrowers. The lack of verification makes these loans particularly simple targets for fraud.

Stated income loans fill a gap of situations which normal loan standards would not approve. For example, a standard rule is that a customer’s mortgage and other loan payments should take up no more than 45% of the person’s income. This would seem prudent for a person just owning their main home. However, a real estate investor may have multiple properties and for each may receive only a small amount more than their loan payments on each house, but end up with $200,000 in disposable income. Nevertheless, a non-stated income loan would decline this person since their debt to income ratio would not be in line. The same issue can arise with self-employed borrowers, where the bank with a fully documented loan would include the borrower’s business debt in their debt to income calculation. Stated income loans also help borrowers where fully documented loans normally would not consider the source of income as being reliable and stable, such as investors who consistently earn capital gains. Fully documented loans also do not consider potential future income increases. Another type of loan that uses the same principles is the no income disclosure loan.

In August 2006, Steven Krystofiak, president of the Mortgage Brokers Association for Responsible Lending, in a statement at a Federal Reserve hearing on mortgage regulation, reported that his organization had compared a sample of 100 stated income mortgage applications to IRS records, and found almost 60% of the sampled loans had overstated their income by more than 50 percent.

U.S. Senator Chuck Schumer is currently leading an effort to restrict stated income loans; his Borrowers Protection Act of 2007 would essentially forbid them. A few years later, Chuck Shumer’s efforts came to fruition with the Dodd-Frank Financial Reform Bill HR4173. Within the Bill, Section 1411 has the following excerpt, “A creditor making a residential mortgage loan shall verify amounts of income or assets that such creditor relies on to determine repayment ability…”,. Currently, lenders are conducting their own version of income and asset verification.

Stated income loans are still offered typically by small local banks. Qualification requirements are based on stable employment, good reserves, good FICO and no less than 40% equity position in the property. Stated income loan availability changes state to state, county to county.

US Mortgage Applications Up 5% Last Week

Apr 10, 2013 in Unique Loan Programs | Comments Off

US Mortgage Applications Up 5% Last Week
Adjustable-rate mortgages, or ARMs, made up 5% of total activity. The Home Affordable Refinance Program share of refinance applications increased to 30% from the prior week's 28%. The average rate on 30-year fixed-rate mortgages with conforming loan …
If you would like more informaiton please visit here…

5 Things Preventing You From Getting a Mortgage Refinance
Refinances through the Home Affordable Refinance Program (HARP) topped 1 million in 2012, more than double the year prior. The HARP program helps underwater homeowners with Fannie Mae- and Freddie Mac-backed loans. It's possible for some …
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Coast Hills FCU Reports Members Take to HARP
The 50,000-member, $ 689 million Coast Hills Federal Credit Union in Lompoc, Calif., is the latest to report that its members have been refinancing a lot of mortgage loans through the latest version of the government's Home Affordable Refinance Program.
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Can a home loan be changed later down the line?

Apr 10, 2013 in Stated Income Loans | 1 comment

by Vietnam Plants & The USA. plants

Question by hww22: Can a home loan be changed later down the line?
If I were to get a no ratio or a no doc loan could I change it to something else later to get a lower interest loan and how much does it cost to do this?

Best answer:

Answer by ♫♪Always Singing♫♪
You would need to refi.

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Q&A: What are the steps we need to take to get pre-approved and buy a home for the first time?

Apr 10, 2013 in FHA Information | 3 comments

Question by Amber A: What are the steps we need to take to get pre-approved and buy a home for the first time?
My husband and I live in a two bedroom apartment with our 4 year old daughter and 2 year old son. We have lived here for 4 years and need to buy a home this year. We really don’t know where to get started and it’s a little intimidating! Any suggestions or experiences you have had would be helpful and most appreciated Thank you!

Best answer:

Answer by Big Deal Maker
Go to your nearest credit union that you belong to or even if you do not at least that would be a good place to start.
Then try a FHA home loan.
And please have a real estate attorney go over all of your paper work including the loan. It will be well worth the few thousand you spend with them.

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I plan on filing income taxes for 2007 year?

Apr 10, 2013 in Stated Income Loans | 2 comments

Question by Sweethoney: I plan on filing income taxes for 2007 year?
if you owe loans to like check n go places and credit cards will they take your income tax check?

Best answer:

Answer by Serge M
If you mean will creditors take your income tax refund, they can do so only after proper legal procedures. They would have to have a judgment against you for your debts and may be able to use it to claim your tax refund to satisfy the debt.

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What's the Story with FHA?

Apr 10, 2013 in FHA Information | Comments Off

What's the Story with FHA?
It used to be that credit scores were relatively low to qualify for FHA loans. But FHA borrowers today have credit scores at historically high levels due to rigor in the lending environment. Everyone is doing higher quality loans right now, even FHA …
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Veterans With FHA Loans How To Get Rid of The Mortgage Insurance
A colleague of mine passed on this great tip on how veterans that currently have an FHA loan can refinance to a VA mortgage and save the cost of the mortgage insurance they are paying. If you have an FHA loan then you are paying a mortgage insurance …
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