Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: Ramsey Su who wrote (46721)	12/6/2005 2:16:30 PM
From: mishedlo	Read Replies (1) \| Respond to of 110194

Stated Income Fraud globaleconomicanalysis.blogspot.com Mish An email reply with bolding added by me on something I was not aware of: Hello, By and large I agree with the points raised in the article. However, I don't agree with the article's emphasis that what it calls stated income fraud is all loan officer driven. From my point of view it is consumer driven. Don't underestimate the pressure of being told that if I cannot get a loan approved than somebody else down the street can. Consumers (and real estate agents) want to know that the loan is approved, they expect it and even demand it. Normal competition drives them to loan officers who can get their loan approved, not let it get turned down on technicalities. They want the loan officer to perform, and to be competent. Normal competitive pressures also makes loan officers want to do the loan at a lower rate than the loan officers down the street. If a loan could be done for .25% lower rate with stated income than with no ratio qualifying (no income figure put on the application), you can bet the borrower wants the lower rate and all things being equal will gravitate towards the loan officer who will give it to him. The bottom line is that loan officers aren't inherently more greedy than they were before, or even necessarily more greedy than people in other professions (sales or otherwise). I agree that the standards for stated income loans are relatively loose throughout the industry, including Fannie and Freddie. If a borrower has a high enough credit score he can get a Fannie Mae conforming loan on a stated income basis without it even being called a stated income loan. The automated underwriting feedback certificate merely fails to show a requirement for income documentation. Sincerely, J** F***** (loan officer working for mortgage broker in California, 19 years in the business)