NC Stated Income Mortgage (loan, interest rate, income tax, approval)

[StillLookingToo]

I have been reading where these will be banned after January 1 2008 in North Carolina. Does anyone know about the changes? What options will the many self employed people have with good credit and assets?

[galore]

Originally Posted by StillLookingToo

I have been reading where these will be banned after January 1 2008 in North Carolina. Does anyone know about the changes? What options will the many self employed people have with good credit and assets?

* provide income tax statements
* open your books to the mortgage company

pretty much similar to what employed people do.

[UseJeff]

Minnesota already made similar changes. The nasty one is that they remove stated income loans. They should have made it so only "self employed" people could obtain these loans, as they are they people they were designed for in the first place.

Essentially, you will have to prove your income. If the banks/lenders don't let you use your gross income vs. your adjusted gross income, you could be in pretty bad shape when it comes to qualifying for a loan.

Many lenders let you qualify by showing bank statements for your business, and will let you use your deposits. They will want a profit and loss statement as well. The main problem here is that these are typically sub prime lenders, and these days they actually have sub prime rates.

Fannie/Freddie loans will still give a "stated" type approval as long as you qualify full doc. Essentially what happens is this... the lender runs the automated underwriting as if the loan will be full doc. The well qualified borrowers will only be requested to show a business license, and no actual income documents. So, you get full doc pricing, and you're essentially going full doc in the lenders eyes, yet you don't actually have to provide anything.

So, if you have great equity, great credit, a first loan amount of $417,000 or less, and cash reserves it may not effect you. If you don't fit this little box, you may want to try and get some sort of 30 year fixed product before 2008.

Personally I can't see how this isn't changed quickly. There will be people who have solid credit and the ability to pay stuck in short term adjustables just because they write off their expenses. Another example of lawmakers making laws for something they don't understand. It might have been a decent idea to get some info from people in the field before moving forward. Donkeys....

[lchoro]

Stated loans are still around. Many of the lenders are now requiring 20 percent down. These are still more liberal terms than were available in the 90s when 30 percent down was the norm.

[renriq02]

Hey I'm in NC.

They havent announced anything yet, but it may happen.
NC is a very strict state when it comes to mortgages.

Sometimes you can still qualify going full doc as a self employed person BUT if you're moving from another state...it will be hard to show a new business opening up.

Originally Posted by StillLookingToo

I have been reading where these will be banned after January 1 2008 in North Carolina. Does anyone know about the changes? What options will the many self employed people have with good credit and assets?

[UseJeff]

Originally Posted by lchoro

Stated loans are still around. Many of the lenders are now requiring 20 percent down. These are still more liberal terms than were available in the 90s when 30 percent down was the norm.

It's not that stated loans are not offered by lenders, it's that some states are making "stated" documentation illegal for obtaining a home mortgage.

[StillLookingToo]

UserJeff, that is what I am referring to. I just saw something on the net about a new NC Bil 1817l, SL2007-0352 that bans stated loans. But I am not able to figure out if it banning all or some certain stated income loans.

[renriq02]

The new North Carolina law, which goes into effect January 1st, essentially ends stated-income loan applications for state-regulated loans, applications where borrowers estimate their income and lenders usually don't check. Since stated-income loan applications represent additional risk, lenders get a higher interest rate when such applications are used -- even from borrowers with jobs, W-2 forms, payroll stubs and tax returns who can readily document their income.

Originally Posted by StillLookingToo

UserJeff, that is what I am referring to. I just saw something on the net about a new NC Bil 1817l, SL2007-0352 that bans stated loans. But I am not able to figure out if it banning all or some certain stated income loans.

[StillLookingToo]

banker, thanks for the answer. What a shame. In the recent past I have done fast & easy loans at Countrywide for people with excellent credit and assets at the same rate as their standard full doc loans without all the hoops to jump through. Being self employed, years ago the same company Countrywide, once asked me to provide 7 years of personal tax returns, company tax returns, and financials from my CPA I am sorry to see that go away.

[renriq02]

yea oh well...NC didnt have a stated mortgage problem EITHER!

i just had a customer call me, and asking about our stated programs.

oh well

Originally Posted by StillLookingToo

banker, thanks for the answer. What a shame. In the recent past I have done fast & easy loans at Countrywide for people with excellent credit and assets at the same rate as their standard full doc loans without all the hoops to jump through. Being self employed, years ago the same company Countrywide, once asked me to provide 7 years of personal tax returns, company tax returns, and financials from my CPA I am sorry to see that go away.