Do We Need Stated/Stated Loans?

How many times have you heard this called a "Liar's Loan?"

But is it really a liar's loan?  I don't think so.  It is a loan for good people who have trouble documenting their income for a variety of reasons.

Among those who need this loan are successful business owners who run successful businesses but pay minimal taxes because they have many legitimate "write-offs."

There are also the successful investors who make beaucoup bucks but have huge interest and depreciation write-offs.

These people could do a "full doc" loan if the underwriting standards and guidelines were such that the "net taxable income" from their IRS Form 1040 was NOT THE NUMBER that they used to qualify them.

Until and unless we get better underwriters and underwriting standards and guidelines, the Stated/Stated loan is our only hope for a healthy real estate market.

A healthy real estate market needs many buyers and sellers. If we take a big group of people out of the game then we can expect the market to suffer.

Those that call this a Liar's Loan have no idea what they are talking about. I'm sure that there has been some fraud associated with these programs, but I don't believe that it represents anything more than a very small percentage of the loans that have been made.

Those that are willing to lie are also willing to supply "false" documents for full doc loans. Or say that they intend to live in the house when they have no such intentions. Why penalize those that really need the stated/stated loan product because of a few bad apples? Especially since the bad apples will find a way to do their thing anyway?