PMI Companies - No More Coverage For Reduced Documentation Loans

Early this month the PMI companies decided to discontinue insuring reduced documentation loans. These loans were commonly referred to as Stated Income and/or Stated Assets. As a result many lenders withdrew these programs from their product lines. Un-insured loans on a reduced documentation basis have become a risk that investors are unwilling to take. Although few lenders still offer loans under 80% LTV the majority increased the minimum credit score requirements.

These loans were commonly used by individuals who were self employed. In the past there were loans that allowed Bank Statements to be used as Full Documentation. This method was vastly allowable in the sub-prime sector. Very few lenders remain that accept Bank Statements. Those who do typically have very high interest rates. If you are self-employed you should begin to consult with an accountant regarding how to show income on your taxes for future loan needs.

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