Stated, No Doc, No Ratio Home Loans..Think They Are in The Past? Guess Again

Matt - I would be interested in knowing a couple of things :

1. What is the ideal credit score for a no -doc loan for the self-employed ( here we are looking at 720 or higher )

2. In RED loans are the borrowers still subject to pay off all existing collections ? ( Or are we in TN being fed a line of bull )

3. Is Fannie currently allowing up to but not exceeding $5,000 in collection ?

I wish our Lenders here would all be on the same page. We are seeing much discrepancies in these areas that I asked above.

Melissa, First off thank you for your comment. Now to answer your question. (please keep in mind I am in Florida and programs might be different in Tennessee)

1. The 720 is a good idea if you want that No Doc Loan.  If the loan is not going through Fannie then the LTV would also be a good consideration

2. Not sure what you mean by RED loans. I would guess you mean Sub-prime or hard equity. In that case no they would not be required to pay those off.

3.  This is true and in some cases even more than that. It will also depend on what type of collection they are.

I hope I was able to answer your questions

Matt - Thanks ! The RED we work with a lot. That is Rural Economic Development Loans. They are extremely picky. For instance a home must have rain gutters and if their are stairs leading to the home whether porch or just plain cement , handrails have to be in place before they loan. We have been advised all collections have to be paid prior to closing, in some cases they have to be removed in their entirety from the report !

This is nice...we have a simliar, albeit not the same, product in Illinois.

Hey Matt,

Great Post and very informative.

Sean Allen

Melissa, Thanks for letting me know. I really have never gotten into that type of loan.

Larry, These products are all over.  But they could not be available to some states because of Laws.

Sean, Thank you.

Thanks for helping to dispel those pesky rumors, Matthew!  One of the many reasons to use a broker as opposed to a lender. 

Matthew, You said it! I agree with you 1000%..

Matt,  Good info.  I've known about most of this, but it is great info and education for those that need a better understanding and to help not only motivate buyers, but also agents as well.

Love it when a mortgage post is featured from someone in the trenches. There is so much fear and hesitation on the part of borrowers right now. Thanks for blasting out a little re-assurance, and great job on the post.

I must echo Janet's comment, nice to see this have the chance to garner much attention and exposure.  This is a nice piece of work Matthew.  RISK = RATE....absolutely!

Matt... I agree with many comments here. Just the fact that you are making people aware of what is out there and not the rumors which aren't always true. When we spoke a few weeks ago, I told you that I even read a comment or a post from a LENDER that stated that stateds were done... done... and that was about 3 weeks ago. That is sad... maybe their company stopped, but not fannie and some of those ALT - A companies...

I was getting a bit concerned for myself as well other self-employed people that do not get a regular paycheck- only a 1099.  We need lenders that can bend when needed.

Marc, My pleasure. I am just getting e-mails and phone calls from clients who keep asking. I thought by posting this it would help.

Janet, Thank you. I am shocked and grateful that I was featured.  I just get so tired of all the rumors. Thanks for your support

Jason, Thank you for your e mail this morning.   Doesn't it always come down to risk = rate?.. :-)

Jeff, True maybe they stopped doing Stated loans but they are still available. In fact one of my in's at a very large lender (If you call me I will tell you) told me that their Stated Products where one of the most profitable and lowest problems product.

Rick,Right now as long as you are self employed you are ok.  The problem really was the people who where w-2 and needed to go stated.  Hello lets face it those are pretty easy loans to show proof of income.  Now their are outside problems like waiter, bartender, dance, etc...Thank you for your comment

Look what happend...you still need to tweak and look what happend anyway:)

We have not seen any of these in some time now. Suspect things might change more toward the back half of this year.

best 

Nicely done and well put.And it sounds like those "RED" loans, referring to Melissa Grant, are more like FHA to me. We don't do too many of those here in Chicagoland.

Great post and information, as always.  Thank you for educating me.

Neal, Thanks for your heads up. 

Gary and Richard, I agree towards the later part of the year we will see more and more loans coming back

Keith, I know in South Florida we don't get much of those type loans.

Barbara, My pleasure. Glad you liked it.

I just had a client approved for a no doc loan here in Bellingham, WA, They are alive.

"Should I Wait to Purchase if Fannie Say's No...  This is a very simple answer. NO! Right now is a true buyers market and you can take advantage of some wonderful buys.  Also, their is a HUGE Difference the way Fannie Mae looks at a purchase versus a Refinance.  If you purchase your home now (in a down market) and make good payments for a minimum of 12 months your chances to refinance into a Fannie Mae loan  go up tremendously.  Fannie Mae will look at your Mortgage History and how you paid it."

You better hope the location you buy isn't designated a declining market after that year.   You will most likely need a minimum of 10% equity in the property if you want to refinance assuming rates are lower at that point.  I agree with and have access to many of the things you stated , but you can't assume that as long as you just pay your mortgage on time for a year, you will be able to refinance into a lower rate.  Your odds increase based on credit, but that is only a small part of the equation - income, assets, ltv, cltv, current market conditions.  How much risk will banks be able to stomach in the upcoming months?  I don't know - but i believe we'll see a timed low in rates set to the peak of the spring market.  I'm optimistic.

Best wishes.  

Michael, Exactly! THank you for your comment

David, First off I just did a 95 Rate and term refinance so programs are still available and it can only get better.  I fully disclose everything to my clients as far as risk goes.  I would not place them in a 2 year (which is not available anyway) or a short term that could risk them.  I have even done these loans as a 30 year fixed rate so this way when ever the client is ready they can refiance.  We are in Florida and yes the market is adjusting.  In your comment you went back to income, assets these loans are no documentation loans.  Fannie still offers these products but the LTV and FICO must be within guidelines.  Thank you for your comment

Matt,

 Great post!  I read an e-mail today that Wachovia sent for SISA and SIVA and No doc all of course were for 30 yr fixed loans!  No talk of ARM's in that solicitation........

Matt-Excellent post...some hard core mortgage info.. I think you said it best.... RISK = RATE. 

I wonder how many loan officers...use those words...I used to tell people..qualifying for a mortgage is a privledge and an honor.  The bank has enough faith in you to pay back the loan.  Remember one thing..the higher the risk...the higher the rate.  Mr. and Mrs. Buyer do you understand that?  

I did B and C loans...I dislike mortgages as much as I dislike the cold.  I can spot a great loan officer a mile away! :) Hope 2008 started out rocking..It's going to be a great year!

Matt:  Great post, great info and yet another confirmation as to why I love my brokers!!

Jennifer, I think with type of loans they are going me more safe guards. No more 2 year fixed.  Which is really a good thing

Midori, Thank you. I agree I think 08 is going to be a great year

Debe, Thank you. I agree a good broker can give clients many options.

Hi Matt - thanks for this info, and it's good to know what's available cotrary to what we might be hearing.  I keep telling people the mortgages are out there, but you have to do more than just breathe at this point.

I'm glad this post is featured so more people can see what you've written here. Great positive information!

Ann

It just seems to me that most loan officers are one trick ponies...doing the same loans over and over. I'm so glad to hear that you are so creative and an out-of-the box thinker! GBU!

Thanks for again a most informative post...sent you an email...I have a client for you.

Karen

This is a very important post and thanks for taking the time to explaining what is going on with the mortgage products.  I had no idea.

Ann, Thank you.  I am just hearing so much miss information out their I felt I should write about it.

Elizabeth, I like the one trick ponies term... I agree with you. Thank you for your comment

Karen, I received your email.  Thank you for placing your trust in me.

Joan, Thank you. Many people believe their is only one type of mortgage available today.

Matt,

I'm enrolling in the Matthew Blum Academy.  You present issues so well; I particularly like the "RATE = RISK."  I'm going to start using that. 

Seriously, I appreciate the way you write; it's downright useful, and there's no higher compliment in my book!

Mike in Tucson

Matt,

I think you misinterpreted the tone of my comment.  I to can do 95% refi's, 100% purchase money, income and asset waivers, stated income, property waivers, on and on and on.  Sure.  My point was about Fannie and Freddie doing this .  I'm not here to rain on your parade so best wishes.

Dave

Matthew- Congratulations on your featured post! And what an important post to have featured! This stuff needs to get out there so people are not so scared by the irresponsible media to buy a house! Katerina

Mike, Not a problem.. Lets see how much should I charge per credit..ha ha

David, I know what you meant and I understand in is a decline markets that is why all of these loans are for longer term and when the market turns around which it will because we are in Florida.  Then when the client is ready to refinance they can.  They will not be forced to.  Thanks for the link though

Katerina, I know I was very happy with the star. I was not expecting it but very greatful. I agree so many people are hear rumors that just no true.

I like brokers :)  For one...don't like sitting around waiting for one to give a prequal in five days..nope that don't work. Another, they can search around and get the best deal for my client.

Sally, This is very true.  The key is to find a good one. I know you have found that in Hawaii.

I bookmarked this for future reference. Not only was your post great, the comments were very informative as well.

Christy, Wow Thank you very much. Just to let you know each state has different laws when it comes to these type of loans you may want to check with your local Licensed Mortgage Professional to find out.

Matt - I depend so much on you and other AR members to keep me posted on what is available - thanks for always being there for us.

Thesa, My pleasure. I hope your new year is starting out great!

So Matt,

I guess us Realtors(R) are stated - verified?

Karen, You have a couple of problems..ha ha.. just kidding but on the serious side many lenders today will not allow mortgage people or Realtors to go stated at all. Don't worry I still have Lenders that will allow this but it is a concern. Remember more info you can provide the better it is for you.