Goodbye my Friend "Stated"

who's playing hall monitor? there are rules already in place. where's the enforcement?

Pete, I am not playing hall moniter just reporting what I heard. but you have to understand people got used to lying. 

used to lying??

there are consumers that know how to do it better than I do!

any good mortgage broker knows how to skirt the system's safeguards anyway

you only find out that someone lied when they stop paying the bill!!

hall monitor??

 how are you going to enforce these on each loan??? force everyone to full doc? people still lie on full doc

this is an overreaction by the market's investors...

Matthew, This is a good post.  Unfortunately those who have abused the stated system and helped with some of the delinquencies, it has caused a reaction to the entire industry.  Its like anything else, abuse it and it gets taken away! 

Matt... I agree with David.... I have caught a few that tried to pull a fast one on me even when it came to pay stubs and w-2's.

Besides.... you all are talking about stated wage earners. Those have been the least of my concerns. What about the real stated deals?  These are even starting to become extinct with some lenders. If not, they are lowering the LTV's and or raising the fico scores.  

Overall....  good awareness here...

David,  I agree with you that it is an overreaction by the investors but we are talking billions of dollars. but still..

Kim, So true.. but the people who really abused left the business... so we are left to clean up the,,,well you know

Jeff, It really is not that hard to pull fast ones but lets face it who really wins if the loan goes bad?  You know the lenders will be knocking on our doors demanding a buy back.. then what... Thats why if it smells like.....I walk away

Matt - I love your honesty and straightforwardness, I wish there were more people like you in the real estate industry overall.

LOL...I have so many comments, I don't know where to begin.  First, it is a real tragedy that these programs have been misused and now they are not going to be avaible for the people that need them.  What are the business owners, waitresses and, for PC sake lets call them "dancers", what are they going to do now to buy a house?  Start claiming that income to the IRS?

Matt, You know I almost always use stated income loans when I purchase. It's just so much easier. And I NEVER lie about my income. Not being able to use them really sucks for the self employed!

Thesa, Thank you very much you are very kind

Leah, I like the dancer part...but I would like to see how many of those people % wise had foreclosure versus a regular w-2?

Bryant,  Being Self-Employed should help however you are a broker and they have really tightened up on that as well.  Goes to show the few vs the mass... it is very sad..

in most cases stated for w2 employees from the lenders standpoint was for convenience unfortunately from the applicants standpoint it was often seen as an opportunity to qualify that wasn't otherwise available.

so i'm a commissioned income w2 employee, what to do with me? 

Matt,

I heard that today as well, with stated gone and very few high LTV products anymore, we are going to need a big change for the better, or else....

Tom Weiss

Jay,  Your right I think many people just assumed it was ok to lie about their income.  However to your question most lenders did not allow w-2 loan officers to go stated...We did have a few that did however but now they are either out of business or have tight up the rules... full doc for you

Tom, It will just be a matter of time.... time as in years not months before it loosens up a little.. that is what happens people over react and freak out.

Matt,

You are right about the stated loans being liar loans.  I have witnessed serval buyers trying this way to buy and they always get angry when I say NO! 

I know some really good people that have stated loans that make a lot of money have great credit but just don't show a high net profit.  These people pay on time and still have great credit.  Then I know people that have bought homes with 580 credit score sub prime as a stated loan and paid on time.  Then I know some that didn't pay on time. 

I also know people that had perfect credit did stated loan and then paid on time for a few years, gets a divorce and bam.......can't make the payments......

My question is why is it that the Mortgage Broker, Loan Officer, Lender ,Underwriter, or Real Estate Agent is to blame when a person that has NEVER paid their bills on time get a mortgage and defaults?  Or when someone gets a divorce? Or when someone loses their job?  Why are we suddenly responsible for problems that we have no control over???????

Ok, I thought this was a good post.  Some of the comments were...well I'm an agent so I don't get all of it.  People will always want more than they can afford or should buy.  I consider this part of the pendulum.  All the way to one side or the other before coming back to the middle.  No one knows what will happen in the near or distant future with income, jobs, marriage..whatever.  Until there is a Mortgage Fairy that can answer all of the crystal ball questions there will always be issues.  Just my opinion.  :)  That's part of working with people.

Thank you Matt for this post .  I like reading about what's happening in the Mortgage side of the industry. 

Jennifer, I agree it is not anyone's fault when those things happen.  I was speaking about the purchase of the home and to what extent people will go to, to make the client qualify.  Thank you for your comment

Stephanie, My pleasure.  In South Florida it was very difficult for people to buy a first time home because it was so expensive.  So many people adopted a policy of lying to qualify for these homes.  Not sure what they where thinking...but..

Thank you so much for this post!  I am so glad to find a mortgage broker here on Active Rain who is not putting down Stated loans. They were a very vital part of self employed people to get loans. That is how I got my house. That is how we got to refinance our house. I went through a nasty divorce where my credit was destroyed. Does that mean I should not be able to live the American dream of homeownership after divorce? I was also a Realtor and a single mom after my divorce. Do you think I wrote off every possible expense I was allowed under the IRS code to write off to lower my tax base? You bet I did!  My house payment is less than what rent is in our area so does that mean I should not be able to get a loan because I am self employed. Some agents are blaming the mortgage companies, they are not looking at the whole picture. Many agents are  married and have 2 incomes where one spouse is not self employed so they can qualify full doc. Well, I can't! So just because there are liars should I get punished? 

OK I am on my soap box. I am so passionate about this subject. If people do lie than they pay the consequences of not being able to make their payments. That is not the fault of the programs. Then  Big Brother comes in to make more rules and regulations that hurt a huge buying population. I know so many deserving clients who I have helped get into homes with the stated loans. I also know plenty of clients who lie on their FHA applications and provide fraudulent docs for their full doc loans! So are they going to get rid of FHA loans? That would be fair. Just get rid of all the loans so they can get rid of liars. Require all home sales to be paid in cash! LOL! Money don't lie! Why punish the good people because of a few bad apples? 

The market downturn in Florida was not because of stated loans. It was because of too many novice speculative newbee investors trying to cash in on the flip the house fad. They got caught in the bubble, and when they could not sell for more than what they paid for the property, they just walked away many without ever even making their first payment. These were not good folks wanting to live the American Dream. 

Wake up and be accountable for your own choices. We are a free country full of choices. We can not be Big Brother and Big Mother to everyone and still keep our freedom. Just my two cents!  

Katerina, So many people are bashing the "STATED" loans because it is the PC thing to do.  But you are a 100% right.  I have seen so many people try and forge documents.  I am sure this has been done since the beginning of time.  This was meant as a tool not a loop hole.  Being self-employed always helps and I believe they will continue doing stated loans for self-employed people at least for now.

Matt- the sad thing is that NAR jumped on the bashing wagon too! 

Matt - it definitely had a place but you're right it often got abused - what a shame!

Cyndee,  You are right.. people used this as a loop hole.. What a shame because it did have it's place. 

Hi, Matt - Glad to see you still have a sense of humor.  Excellent post.  Thank you!

I recently had a client who produces little income from being a researcher and author on military history, but lives off of inherited trust funds.  He could have paid cash for his home and every other one on the block, but instead he "stated income" from his trust fund for an 80% ltv.  It was ideal for his situation.  Without the stated income loan, he still could have bought the home, but this program made it simple.

Margaret,  All we can do is laugh.. if not we will all cry..:-)    Glad your client was able to close.