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The lenders have learned, "liars loans" are now scarce as hen's teeth, and with pretty unattractive rates.
I can think of very few legitimate needs for a loans where the borrower's ability to repay from income should not be a huge part of the approval process.
I wasn't asking for opinions, I was asking for real data. I'm curious how the mortage market is changing and what cracks might be opening.
Cracks opening?
There are INCREASES in the rate of foreclosure.
Basically EVERY lender has all but shut down their wholesale operations -- that means no more crazy competition to see which company would offer ever weaker qualifications.
Believe me, any office still doing "stated income" loans are running every damn 4506 back through the IRS and then going over it with a fine toothed comb.
If you think you can sneak something under the radar you have not seen the news reports -- things are getting worse!
Sorry if it came off nasty. Let me tell you where I am coming from. I have encountered dozens of people that were mortgage brokers in the Chicago market as I have been in real estate for about four decades. Two very good friends were in the field for a long time. Back when mortgages where generally a just a way to buy a house, these mortgage brokers were just sort of sales guys. Nice enough living, nothing too dramatic.
As refinancing, flipping, arms, HELOCs and everything else EXPLODED it turned into a CRAZY world where some people were raking dough like leaves off in September. DEEP in the six figures.
Back to the friends, "Bart" was a guy that I actually was on the same high school football team. Great guy. He worked for a company that also financed stuff like airplanes right out college. Good for me to know -- I owned rental property and some of it he helped me finance. Other friend, "Earl" actually was youngest kid of the family that lived up the street from when I was growing up. Nice guy. Never finished college. Great with languages - dad was from Old World and mom from Latin America, he spoke four or more languages. Worked a much more diverse set off neighborhoods than Bart, but he helped me too -- connection to realtors helped to buy / sell properties. I would see each of these at least half a dozen times a year over the past 10-15 years. As the market shifted from traditional borrowers to those with more challenges my buddies BOTH did more business, even though neither of them did more than an occasional "stated income" loan, mostly for the self-employed. As Earl's reputation for being able to literally TALK to anyone (well he does not know any languages from Asia or Africa...) he met some CRAZY people that really and truly did LIE on their loans. He never really needed to get the commissions on those loans so he generally would let a very junior MO get credit (take responsibility) for those. Meanwhile he focused more and more on his portfolio of properties. Bart, meanwhile, was so successful he was working on his own. He made a solid business, with his own tidy office in the cute town where his parents lived. Flash forward to the last 6 months. Earl no longer has ANY income from mortgage banking. Literally the places he used to work are GONE. Bart still is in the business , but working for a very different kind of firm, not his own place. He has kids to put through college and is mostly upbeat, but I know he was / is a very honest, honorable guy that loved the life he had a lot more than situation he has been forced into.
What does this have to do with "no income verification"? BOTH Bart and Earl will readily tell anybody that'll listen that "stated income" has a place in lending, but "no income verification" is madness -- an invitation to GIVE AWAY money to people that IN ALL LIKELIHOOD have ZERO ability to repay anything, a suckers move that killed a goose that laid golden eggs, the "addict" to the CDO "pusher"...
So, I could actually give these guys a ring and ask them about "cracks opening", but since I've already seen the damage that such foolishness has caused, and heard the anguish ... If you've read my posts I can be harsh, but believe me I'm not heartless. In fact, one of the things that Earl would have liked to do is finance his retired dad's relocation to the country where his parents met. Earl's dad has peripheral vascular disease and it apparently it is real hard to be in Chicago for the winters for him. Earl needs his rental properties to pay his bills. He can't afford to send his parents to where it is warm. He is rational guy, he knows it is not really his duty, and he can't "blame" himself for the failure of so many mortgage brokers, but that doesn't mean it doesn't make him angry, or get get choked up how he "could have been so complacent" when he really wasn't, but it is what he, and MANY others are dealing with...
I'm no lender, but I would venture to guess that if you had 1) a sizable bank account and/ or 2) were a trust fund baby and/or 3) had tons of assets as collateral, then you may be able to find a no income verified loan. But of course, all these scenerios give the bank collateral. I think that is the big question now, in today's economic climate - does the borrower have collateral?
Even still, I'm thinking that scenerio #3 won't work well anymore, b/c I doubt that the banks will want to obtain more houses, boats, land, whatever, if you can't make your payment. These days, banks want to be SURE that you can pay it back.
I can say that is for sure. I just did a re-fi for a house I purchased last September. I financed with the local bank (known to be very strict in lending), they put me through the wringer.
For this re-fi, even though they knew my situation, talked to the same person, very high credit score, savings, etc., I still had to bring in a check stub for what I'm currently receiving in pension. They hold their mortgages don't sell them off and I know they won't lend unless they are guaranteed you have the money to cover it (and then some probably).
Last edited by susancruzs; 12-10-2008 at 08:33 AM..
Reason: paragraph
Location: central, between Pepe's Tacos and Roberto's
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Quote:
Originally Posted by chet everett
What does this have to do with "no income verification"? BOTH Bart and Earl will readily tell anybody that'll listen that "stated income" has a place in lending, but "no income verification" is madness -- an invitation to GIVE AWAY money to people that IN ALL LIKELIHOOD have ZERO ability to repay anything, a suckers move that killed a goose that laid golden eggs, the "addict" to the CDO "pusher"...
With all due respect, stated income loans and no income verification loans are one in the same.
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You've got to be kidding!
