July 14, 2024

Stated income loans generally target borrowers who work on commission, are self-employed, or otherwise have a difficult time documenting their income.  The loans are attractive to these borrowers because they do not require income verification.

Findings by the Mortgage Asset Research Institute, a mortgage fraud analyst, suggest the loans spell trouble.  Based on one lender’s comparison of incomes stated in its applications and incomes reported to the IRS, 90 percent of stated incomes were inflated by 5 percent or more.  In about 60 percent of cases, incomes were exaggerated by 50 percent or more.  It’s risky business when borrowers are living with more mortgage than they can easily afford.[tags]stated income loans, home loans, real estate bubble, California real estate, housing bubble[/tags] San Diego real estate library

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