No loans for Sellers with Undocumented Income
The exact reason No Income Verification loans were created in the first place is the exact challenge now facing numerous potential homeowners who no longer can get a loan – unless you know a R E A L L Y good mortgage broker who has a personal and private relationship with some good banks. Oh, and by the way – this is also the same reason Chris Daly’s rental assistance law is diabolical. There’s no way to account for undocumented income…
With more than $300,000 in combined annual income, tens of thousands of dollars in the bank and credit scores that top 800, Jennifer France and her partner would seem like ideal candidates for a mortgage refinance. But when they applied to swap an interest-only loan on their nearly $1 million San Carlos home for a 30-year fixed that locked in today’s low rates, they were summarily denied. The reason: effectively, because both operate their own businesses.
“I was really surprised, I had been preparing to refinance for years,” said France, a landscaper and gardener. “It’s hard for the self-employed; that puts us in a bind.”
While the amount they make is easily enough to qualify for the new loan, tax deductions for self-employed workers dropped their official income below the threshold that banks wanted to see. A few years ago, theirs would have been the ideal scenario for a stated-income or no-documentation loan, which allowed individuals with ample but unconventional sources of income to secure home loans. But after untold numbers of borrowers lied about their financial wherewithal to buy homes they couldn’t afford, often with a wink and nod from mortgage brokers, nearly all lenders stopped offering what became known derisively as “liar loans.” Now even the well-qualified borrowers for whom the products were first intended can’t get them. [more]
Undocumented income makes it hard to get a loan [SFGate]
The Giant Pool of Money – Hands-down best description of the Credit Crisis [SFHomeBlog]
Daly’s Draconian Renter’s Relief Package Passes [SFHomeBlog]
