Saturday, July 17, 2010
Friday, July 16, 2010
Stated Income Loans Redding Ca
Lately I have been getting a lot of inquiries about stated income loans. I am writing my first blog to let my followers understand why banks are not allowing statement income loans and why I believe eventually stated loans will come back into the market place.
Stated Income has been around for over 20 years in the market place. Its only been with in the last 3 years that stated income has been discontinued. When stated income was first introduced it was designed for the Small Business Owner who made good money but also had lots of tax right offs. Writing off business expenses is a strategy that every small business owner uses to avoid paying income tax.
When stated income was created in the market place there were certain qualifications that a borrower had to follow:
1. The borrower had to show a savings pattern. He had to show at least 6 months of his stated income in order to use the income he was stating he made.
2. The borrower had to show a good credit rating.
3. The borrower had to show his bank statements showing money that was deposited each month into his bank account.
If all three of these were meet the borrower could then qualify for a stated income loan. Because of these qualifications, these mortgages performed very well over the years and this is why stated income stuck around. Now the market has over corrected itself.
The problem with the last 3 years is that banks were getting more profit hungry and loosened up the guidelines to allow not only business owners to state their income but also w2'd employees. Why on earth would an employee need to state his income when we can verify it with pay-stubs and a w2? Employees were now allowed to state how much they made and then eventually banks allowed borrowers to state how much money they had in the bank AKA (Stated Stated or Stated Income / Stated Assets).
This means that Joe, who works at Walmart, could come to a lender and say I make $5,000/month as a Manager of the Electronic Department. He would also say "I have $15,000 in the bank as reserves". Now Joe really doesn't make $5,000 and really doesn't have $15,000 in the bank but really likes the house and wants to "invest" in real estate because home prices are going through the roof. The bank says okay we can lend this money to him because he has a credit score above 700. He is good for it. What the Hell were they thinking?
Now as you can see there is a "make since stated income loan" and a "doesn't really make since stated income loan".
If you are in need of a Stated Income Loan there are very few portfolio lenders that still do them. They are using the same qualifications as I mentioned above. Eventually I thing they will be back in the market place and there will be investors that want purchase these loans because they truly do make since with the right qualifications.
Stated Income has been around for over 20 years in the market place. Its only been with in the last 3 years that stated income has been discontinued. When stated income was first introduced it was designed for the Small Business Owner who made good money but also had lots of tax right offs. Writing off business expenses is a strategy that every small business owner uses to avoid paying income tax.
When stated income was created in the market place there were certain qualifications that a borrower had to follow:
1. The borrower had to show a savings pattern. He had to show at least 6 months of his stated income in order to use the income he was stating he made.
2. The borrower had to show a good credit rating.
3. The borrower had to show his bank statements showing money that was deposited each month into his bank account.
If all three of these were meet the borrower could then qualify for a stated income loan. Because of these qualifications, these mortgages performed very well over the years and this is why stated income stuck around. Now the market has over corrected itself.
The problem with the last 3 years is that banks were getting more profit hungry and loosened up the guidelines to allow not only business owners to state their income but also w2'd employees. Why on earth would an employee need to state his income when we can verify it with pay-stubs and a w2? Employees were now allowed to state how much they made and then eventually banks allowed borrowers to state how much money they had in the bank AKA (Stated Stated or Stated Income / Stated Assets).
This means that Joe, who works at Walmart, could come to a lender and say I make $5,000/month as a Manager of the Electronic Department. He would also say "I have $15,000 in the bank as reserves". Now Joe really doesn't make $5,000 and really doesn't have $15,000 in the bank but really likes the house and wants to "invest" in real estate because home prices are going through the roof. The bank says okay we can lend this money to him because he has a credit score above 700. He is good for it. What the Hell were they thinking?
Now as you can see there is a "make since stated income loan" and a "doesn't really make since stated income loan".
If you are in need of a Stated Income Loan there are very few portfolio lenders that still do them. They are using the same qualifications as I mentioned above. Eventually I thing they will be back in the market place and there will be investors that want purchase these loans because they truly do make since with the right qualifications.
Sunday, January 10, 2010
Social Networking
I think this social networking is getting a little out of hand between twitter, facebook, linked in, & blogger, its starting to get really addictive. I wonder how many millionaires have been created using the social networking avenues for their advertising?
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