stated income loans are back

StatedIncomeLoans

Are Back

STATEDINCOME.ORG

STATEDINCOME.ORG LENDER HOTLINE: 888-581-5008

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Some borrowers who can’t provide tax returnsor pay stubs for proof of income can now applyfor a stated income loan. Lenders might saythese loans are a liar’s loan, but in reality theseloans are great for small business owners orinvestors who are looking to buy property andthen rent. Typically, lenders look for enoughincome to support a twelve-month period ofpayments, some also require extremely highdown payments to reduce the risk of theborrower defaulting.



A Lenders ConcernSome lenders believe the stated income loans couldbe abused by borrowers who may try to use fake bankstatements or who don’t have enough money to repaythe loan. This is why some major banks don’t offerthem. Some lenders don’t give borrowers specificminimums for assets required to show their ability torepay the mortgage, but some lenders will argue thatproof of a year’s worth of payments isn’t enough for athirty-year loan. It’s easier to falsify bank statementsthan it is tax returns and that’s what worry somelenders.



To try and avoid another housing bust the statedincome loans are being known as alternativedocumentation loans, or portfolio programs, oralternative income verification loans. Majority ofthe time borrowers need a credit score of 700,

though some lenders are more lenient and willallow a score as low as 620. Lower scores rangingfrom 300 to 620 usually will have to pay ½ to ¾the percent of the mortgage rate.



Business Owners

Lenders are typically looking for small businessowners whose personal income tax returns may notreflect their ability to repay the loan. Many businessowners who consistently keep income in theirbusiness’ will be able to reduce their personalincome tax obligations. Stated income loans arealso popular for investors who may not fall underthe same income regulations. Some lenders haveeven lowered their standards to try and persuadenew business’ to allow credit scores as low as 600.



Lenders need to have these regulations to protectthemselves from possible court claims and liabilityof finance charges and fees. Ability to repay rulesand regulations apply to those who actually live inthe house. This leaves room for borrower abuse,

some borrowers apply for the mortgage and saythey’re renting the property when in reality they areliving in the house. Since the ability to repay rulesand regulations don’t apply to these types of loansand they require less documentation, borrowerscould be getting into mortgages they really can’tafford. Majority of stated income loans today are soldto private investors or held in lenders portfolios.



T O L E A R N M O R ESTATEDINCOME.ORG

LENDER HOTLINE: 888-581-5008

C L I C K H E R E



Justin McHood is Americas MortgageCommentator and has been providingMortgage commentary for over 10 years.

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stated income loans are back

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