Stated Income Mortgages Are Gone

Filed Under Mortgage Fraud, Mortgage Implosion, Mortgage News
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Fed HOEPA Amendments May Signal Final Goodbye To Stated Income

Stated income loans used to commonplace in the industry. The guidelines were so loose, many called them “liar loans.” Well the credit crisis has devastated this program. One-by-one, the alternatives are going away. The latest? The Federal Reserve Board’s HOEPA (Homeownership Equity Protection Act) rule amendments effective October 1 require the lender to verify income on all “high-cost” loans. That in itself would not be a big deal if the amendments did not take the rule one step further.

The definition of high-cost loans has been changed from 8.0% over comparable Treasury securities to 1.5% over comparable securities. This means that the APR of loans we are doing every day may require a special Section 32 Disclosure as well as the requirement that the lender has to verify all income and assets. Bottom line is: Liar Loans Are Gone!

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