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Location: Jonquil City (aka Smyrna) Georgia- by Atlanta
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Quote:
Originally Posted by Mathguy
Yep. Jesse jackson did this about 10 years ago...and now he's protesting the racist foreclosures. Ugh...what a complete weasel.
Jesse Jackson was right 10 years ago. He is wrong now. It was shown then that banks and lenders were redlining neighbourhoods and refused loans to people and property in those areas.
Today, there is nothing wrong with setting standards on the loans you make as long as they are uniformly applied. That includes a down payment and a decent credit rating.
Jesse Jackson was right 10 years ago. He is wrong now. It was shown then that banks and lenders were redlining neighbourhoods and refused loans to people and property in those areas.
Today, there is nothing wrong with setting standards on the loans you make as long as they are uniformly applied. That includes a down payment and a decent credit rating.
I agree with you 100% that specific criteria should be applied such as credit rating.
Redlining has morphed over the years from clearly discriminatory practices to a catch-all for rate differences.
For example, redlining used to be...they won't write policies to blacks (1960's is when the term came out). Pretty clear-cut racism and bad practices.
Today, if you charge higher auto rates in a zip code because of higher theft rates...you can be accused of redlining if that zip code has a large minority presence. Basically, if a minority group is getting higher rates for whatever reason...even if you are using straightforward criteria like credit score, number of accidents etc. it is labeled redlining.
many people are not going to like this because it is going to reduce demand for housing but it MUST be done anyway. The government needs to step in with new regulations stating what kind of loans that the FHA, Fannie, Freddie and other backed institutions will buy or allow to be be made. This should include the complete outlawing of any sub prime or smoke and mirror adjustable rate loans and the requirement of at least a 5% cash down payment and a credit rating that is decent. All income should be verified using 12 month averaging of bank statements.
All loans should also come with no pre payment penalties so that owners can refiance them at anytime. Many of the people that got into smoke and mirror sub prime loans had such still pre payment penalties that it was impossible for them to refi even if they had made every payment on time! They had no choice but to walk away because they could not refi or sell the house.
In other words it should be made more difficult to buy a home. There was a time in this country that people did save money- and even paid 10 or 20% down for a house! I don't think 5% cash from a verified source is too much to ask. If all these investment banks are not going to be taxpayer insured by the Fed, we have every right to set standards.
One of the things mentioned above is actually a good idea and was done on subprime loans. It was by taking the 12 months bank statements - you totalled the deposits, divided by 12 and that was your income. What I find, as a mortgage broker, is borrowers who are self employed do not (show) have the income to qualify. There are expenses that are deductible. I find the biggest challenge to be individuals with good credit scores, not showing enough income to be unable to qualify for something that they could have done easily in the past.
One of the things mentioned above is actually a good idea and was done on subprime loans. It was by taking the 12 months bank statements - you totalled the deposits, divided by 12 and that was your income. What I find, as a mortgage broker, is borrowers who are self employed do not (show) have the income to qualify. There are expenses that are deductible. I find the biggest challenge to be individuals with good credit scores, not showing enough income to be unable to qualify for something that they could have done easily in the past.
Any why wouldn't the last several years of tax returns be a good verification of income for self employed people ?
They do look at tax returns, but self-employed people write off many "soft" expenses--depreciation and mileage for autos, home office expenses, services, supplies, dues, etc. Many of these writeoffs do not actually reflect an expenditure of "real" dollars, but are passive deductions. Trying to reduce their AGI to lower SE taxes will now keep some of them from buying homes or being forced to buy less of a home than their corporate-employed counterparts.
The SE have been responsibly relying on Alt-A loans for years, with minimal risk of default. Now it's game over for many of them.
They do look at tax returns, but self-employed people write off many "soft" expenses--depreciation and mileage for autos, home office expenses, services, supplies, dues, etc. Many of these writeoffs do not actually reflect an expenditure of "real" dollars, but are passive deductions. Trying to reduce their AGI to lower SE taxes will now keep some of them from buying homes or being forced to buy less of a home than their corporate-employed counterparts.
The SE have been responsibly relying on Alt-A loans for years, with minimal risk of default. Now it's game over for many of them.
Yes sirree bob, hit that one on the head. So what do we do as the self employed other than the obvious? I have been se for 34 yrs and never had a problem, till now.
We wait until the market has calmed and cooler heads prevail.
Alt-A loans have been a good product for the right buyer for years. Once this abuse works its way out of the system, I would hope lenders will once again offer these flexible products to qualified SE buyers. Even A-paper buyers are difficult to fund these days. I'm not saying it's a bad thing-- it's just that sometimes the pendulum swings too far the other way.
They do look at tax returns, but self-employed people write off many "soft" expenses--depreciation and mileage for autos, home office expenses, services, supplies, dues, etc. Many of these writeoffs do not actually reflect an expenditure of "real" dollars, but are passive deductions. Trying to reduce their AGI to lower SE taxes will now keep some of them from buying homes or being forced to buy less of a home than their corporate-employed counterparts.
The SE have been responsibly relying on Alt-A loans for years, with minimal risk of default. Now it's game over for many of them.
Thank you for that detailed response. I have never been self-employed so didn't understand the details.
Since I HOPE to be a buyer soon after I get over being the seller, I have spoke with afew brokers on the available mortgage products. The responses varied for SE, more cash down, higher credit scores & of course tax returns but also I will qualify for less money. My choices are going to be either finance less house or pay high tax to the IRS. Guess which one I will choose.
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Mortgages
