ild,
Are you saying somebody states their income for them?
I am saying exactly that, but we have to define it more clearly.
Coincidentally, I was running through a scenario with a mortgage broker friend today. Here is the profile:
Buyer has barely 5% down.
FICO 610.
Total debt service, including the new mortgage payments, would be about 60% of income.
This profile just about ruled out all conforming loans.
How about a 80-20 package?
The 1st would have a start rated at 6.7% (SFR) or 6.95% (condo), IO.
The 2nd would be 30/30 at 10.95% (sfr) or 11.2% (condo), fully amortized.
Wait, that requires full doc so borrower would not qualify.
"So Mr. Mortgage Broker, what can we qualify for?"
"Well, Mr. and Mrs. Buyer, you can go stated. You need to find 5% down somewhere. Then I can do a 80-15. The 1st would be a 2-28 at 7.2% (sfr) or 7.45% (condo). The 2nd would be a 30/30 at 10.65% (sfr) or 10.9% (condo). No verification is needed for this loan and the borrower has to make $xxx to qualify."
Mr. and Mrs. Buyer decided to choose the last option. Miraculously, the income on the application is $xxx.
All the loan quotes above are current for today.
That scenario, as Tom will tell you, is very very common. Loan applications are taken verbally, or scribbled, then nicely computer generated for the borrowers to sign. |
