If you are a successful small business entrepreneur in America, I can generally group you into one of two groups:
You run a great business and are shrewd with your accounting…
or
You can qualify for a mortgage.
You mean that you can’t be a shrewd small business person and qualify for a mortgage?
Generally speaking… that is exactly what I mean.
During the big real estate and mortgage boom of the early part of the decade many lenders were offering Stated Income Loans which would come in various forms with wild acronyms: NINA, No Doc, Low Doc, etc — But in the last few years, pretty much every loan program at every lender has required that income be documented and verified which eliminated stated income loans.
Until now.
I have seen my first ad from a wholesale lender who is starting to offer stated income loans and I suspect that now one is offering stated income loans, other lenders will follow.
Are stated income loans bad?
I don’t think any particular kind of loan is bad per se — but if a loan program is abused, that is when there are problems. But if you own a small business and happen to be shrewd with your accounting, the good news is that stated income loans may be making a comeback — which means you might actually be able to qualify for a mortgage in the near future.
Oh, and I hope someone figures out how to not let the waitress who makes $2.13 an hour qualify for a $500,000 house because she stated that she made enough to make the payments.
About the Author:Justin McHood calls himself a “Mortgage Commentator” and works for Academy Mortgage Corporation. You can find his loan officers at Ten Day Close and read more of his thoughts on the mortgage business on Zillow’s Mortgages Unzipped Blog. You can also find him at most East Valley Friday Nights gatherings. He’s the one in the blue shirt.
The Phoenix Real Estate Guy was started by Jay Thompson, and I have a little blogging problem... he liked to say...
"Oh, and I hope someone figures out how to not let the waitress who makes $2.13 an hour qualify for a $500,000 house because she stated that she made enough to make the payments."
Isn't that what happened last time?
Tyler, Think about it like this. If a business owner is buying a home for $1,000,000 and putting $300,000 to $400,000 down payment from their own funds, Have very excellent credit, credit depth and scores, Have a minimum of $50,000 plus in reserves. Do YOU really think they are a bad risk? Do you think they are stupid enough to loose their home? Do YOU think its a bad investment for the lender? I DONT THINK SO.
This is great news for small business owners who may just be able to qualify for a mortgage. I believe the wholesale lender is taking a huge gamble with this one and I'm not really sure if more lenders would follow…
With 30% down, this is not so different than many other investment loans. Great news for responsible business owners.
When I read the title I was dreading seeing the return of the hopefully deceased NINJA loans of not so yesteryear! …
This is good info, there were definitely stated income loans out there that worked. The worst were banks that would allow stated income loans for W2 employees. I even remember some banks allowing military to state their income. That was ridiculous! I am sure that we will see a few more of these loans come back to the market but it will take tome.
@Tyler,
Yes, that was one of the things that happened last time. It can't exactly happen under these circumstances – but it is a step in that direction.
@Miami,
There are now two lenders offering these – and time will tell if the first two died out or pulled back – or if it gains broader appeal. I don't really have an "educated" bet as to which of those two options will happen in the future…
@Randy,
Great point. Someone looked at this product and said "oh, that is just kind of like hard money…" — and it is good to hear that I am honing my skills at writing catchy titles.
Justin
Interesting that they are targeting above the conforming loan amounts. That must be the safe zone from congresses newly passed Financial Reform Bill.
If people continue to ignore the truths involved in borrowing money, they will continue to borrow irresponsibly.
I personally don't borrow money at all anymore, and if someone put a gun to my head and told me I had to borrow money to get what I want, I would say, "fine, but no more than 15 years, and no more than 25% of my income goes towards payments."
Stating income is a slippery slope, and this time it's going to need to be made clear by the lender what's actually happening, or they'll be in for a bumpy ride in the future. It's just so annoying to hear that people don't learn from the last round of stupid we went through.
A slippery slope indeed. I still don't see the harm in requiring appropriate documentation to show income in deciding whether or not an applicant is worthy of a loan. Nice post, Justin. Keep 'em coming.
%30 down. its good
Better loan rates are great news. Sounds like the best time in years to buy real estate!
excellent post. i think it's funny that some people want to take away a tool from all because it has been abused by some. a little uncommon sense goes a long way. people have been beaten with hammers, yet we still need and use hammers. your waitress example is especially amusing to those of us who have been in the biz.
the first part about either being a shrewd biz owner OR qualified for financing is exactly on point. good accountants have ruined a lot of good borrowers over the years. it is good to hear that this product is making a comeback, and now that our industry has purged itself of some of its seedier elements, maybe the professionals who are left can make excellent use of this tool.
Great information!! Looks like the lender is making their money the old fashioned way, Up Front in points 🙂 The example loan amounts should net the investor a few quick dollars. No doubt they are assuming a lot of risk themselves but……………….
That would be really news for people who really needs money to afford a home if the lone rate is better there would be much more interested in making the loan.
I'm kind of on the fence when it comes to these types of loans. They can either be really good… or really bad. Guess it all depends on the person, but what i do hope is that people learned from the past and don't borrow irresponsibly just because they can now "get away with it" even though they know they are way out of their league.
No, stated income loans aren't bad… when they are used responsibly by people who actually have the income they claim. It's going to be interesting to see how this all unfolds.
Thats good news as long as the lenders verify the info. I know as a Realtor its the only way that I ahve ever been able to purchase properties
"Thats good news as long as the lenders verify the info."
@Ralph verify what exactly? if they verify the income, then it's not a stated loan.
I think this could be great for the real estate market… but just like you said, as long as it isn't abused. Small business owners with great credit, and verifiable assets should not be pushed out of the market. With 30% down and solid fixed rate mortgages would lessen the chance of people defaulting on the home. Hopefully this is the beginning of lenders loosening up, but not going overboard. All about balance…
Yes..! you are right. I agree with you! As long as it is not abused, small business owners would have a chance to success.
Shouldn't the nature of the applicants business have been or be an obvious factor to the lender? The lenders should be the ones responsible for taking the fall for lending money to someone in a profession that, obviously, cannot yield such income. Due to the misrepresentation of past borrowers and the "blind eye" (or stupidity) of the lenders, the legitimately self employed (Real Estate agents like me) can't buy homes. I own properties, have high credit scores and have made every payment on each stated loan I have but I couldn't move now if I wanted to (without liquidating assets/not my choice). Its a shame since I have every property for sale within my reach.
This is very helpful information. At least they are trying to get it back. Business owners will success for that. 🙂
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Charles Baratta
HI everyone,
YES there are a few Private Banks that are still doing Stated Income loans for SELF-Employed clients. Actually this flyer ABOVE was made from one of my BROKERS that brings majority of their Stated loans to me to submit, so whomever posted this flyer please continue to contact that BROKER. I also have access to the HOT STATED income VOE programs for A salaried Wage earner, NO Tax returns, NO w2, No Pay stubs, just a written VOE. This program goes up to 80% but cannot do in ALL states. I also have access to SUPER JUMBO programs 70% up to 5 MILLION, up to 10 properties, FHA down to a 500 FICO, more options at a 580,, and many more.
EMAIL me for more info: [email protected]
Thank you for your time.
Hey does anyone have the contact information for those wholesale brokers? I have a customer that is a great candidate for the stated program, with great scores and is a business owner… with very good assets.
Whats the name of that Lender who does stated loan? I need a lender who does VOE or stated loan.
matin
Springfield,VA
HI guys
well the Stated Written VOE that was for W2 earners has left the building like 3 weeks ago, Just MTG and PMC had it but it is now gone.
There are a few Stated banks back east: Hudson City, ISB bank and EMIGRANT MTG.
I have stated Private bANK in CALIFORNIA, true Stated for SE and W2, no 4506.. up to 1 MILLION for now, I also have FHA down to a 500 FICO, unlimited Properties, and Super Jumbo to 10 MILLION..
Email me for more details on any of my programs: THX
[email protected]
just a quick update VOE loans are gone!!! I still have STATED income loans in CALIFORNIA for W2 and SE, GOOD RATES, purchase or rate and term, Email me for details.
I also have FHA down to a 500 FICO, SUPER JUMBO to 10 MLLION, UNLIMITED properties, ect.THX
[email protected]