Thursday, April 22, 2010
Stated-income loans – liar loans.
stated-income loans. The popular term now is liar loans...The Mortgage Asset Research Institute referred to a study that found 60 percent of applicants who used stated income exaggerated what they earned by more than 50%.... If you borrow money, you need income to pay it back. The first job of a bank is to check to see if you have income to pay the borrowed money back. If you eliminate the verification of income for a mortgage borrower, you eliminate your ability to predict the likelihood of repayment...The banks required no verification of the statements about income. By that action banks encouraged the fraud...what is clear now is that the crime of stated-income mortgages deserves to be explored fully by criminal prosecutors.