Stated Income Loan 101

Posted on Feb 22, 2014 in Stated Income Loans

Some cool condominium photos:

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Fotoloco photo booth photographs @ The Alexandra Condominium Halloween Celebration | Ortigas &amp Firm | Viridian in Greenhills | All-you-want photo prints from Fotoloco photo booth

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Fotoloco The Alexandra Condominium Halloween Party by Ortigas and Business 071
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Image by FOTOLOCO!
Fotoloco photo booth photos @ The Alexandra Condominium Halloween Celebration | Ortigas &amp Firm | Viridian in Greenhills | All-you-want photo prints from Fotoloco photo booth

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Fotoloco photo booth photographs @ The Alexandra Condominium Halloween Celebration | Ortigas &amp Organization | Viridian in Greenhills | All-you-want photo prints from Fotoloco photo booth

For much more residences click right here…
Question by Wildflower: Reputable mortgage companies?
There must be some reputable mortgage companies out there. We are upside down on our mortgage, help we owe more than the house is worth. We keep getting offers in the mail to refinance and they’re for people who are in our situation. The offers say bad credit doesn’t matter, no equity is okay etc. etc but I’m always afraid they are scammers.
Can anyone help me?

Best answer:

Answer by Toni
Be careful of anything offered to you.
Consider any calls, mail, etc, to be scams.

You must find the company yourself !
You can call the federally sponsored program and they will help you find a list of lenders.
It’s the Making Home Affordable Program . gov
http://makinghomeaffordable.gov/
Surprised to see a new update on the page.
A paragraph on how to avoid re-fi scams (read it).
The government is trying to avoid foreclosures – these people have a sincere concern to help you.

Or you can go to bankrate.com and click on mortgages…

Give your answer to this question below!
Question by dcm1419: I want to buy a house, view how do I do it?
Okay, malady never bought a house before, viagra I’ve only rented apartments. But I am fed up with the renters life! My lease is up this August! I want to get a house in two months what are the necessary steps in order that I should take to get there?

Do I look around first, do I get pre-qualified first? talk to a mortgage company first , what?

I already used an online mortgage calc. it told me my price range, thats about as far as I’ve gotten…

BTW- are those online adds for getting instantly qualified a bunch of bull, or is it legit?

Best answer:

Answer by frak1a12345
Contact a realtor in the area you wish to buy in. They are always looking for good prospects. They will be happy to help you out with all the preliminaries you need to go through. You should talk to a lender to find out what you can afford to buy in addition to the online one you used.
I wouldn’t trust any online ad. There is no way a lender can approve you instantly. They will want documentation like tax returns and paycheck stubs and banking records. Some of those websites could be pure scams just looking to steal a bunch of personal info to set up an identity theft.

Give your answer to this question below!

stated income loansNew 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, thumb 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.