Stated income and LTV , where will it be in 2 years from now?

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Kali_IHB

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<p>I was told stated income loans are becoming more and more challenging to do and they are requiring higher downpayments for this (someone mentioned as high as 25%)</p>

<p>Any thoughts on the validity of this and will stated income be around in 2011 when the market bottoms.</p>
 
IMO, stated income will not be a part of the mortgage landscape in 2011. These programs will always be available, but the requirements will be so onerous and the costs so high that nobody will use them. Too many people who used these programs during the bubble are going to default for them to survive in their current form. Many people are thinking right now that the loose lending programs of the bubble are going to return and bubble prices along with them. Defaults are going to prevent that from happening.
 
i was surprised to find out that my friend, with about 10% down was not only approved for a stated loan but the loan officer pushed for him to do a stated so that the loan would be approved more quickly and that it was only .25 over a full doc loan.... it was this past December?!?
 
<p>This loan product was intended for self-employed individuals. It will still be available but not for W-2s borrowers whom claim they are self employed. </p>

<p>Someone in the lending business says, 100% is possible as long as you can show a 6 mo. reserve</p>
 
Reason,



100% financing with full doc? 6 months reserve means 6 X monthly mortgage payment or monthly living expense? Thanks.
 
<p>Reason (and others),</p>

<p>So, I take that as long as I do full doc and go for the mortgage payment that is affordable 100% financing with good rates are still available. </p>

<p>Mind if you tell me which lender or broker did this? </p>

<p>I have cash reserve for down payment and 6 months plus reserve for what I can afford reasonably (no pun intended) but since I think the price will go down 2 to 3 more years and will stay down for another 3 to 5 years while interest rate going up, putting cash in the CD or money market and get 100% financing for 7 to 10 yr fix may not be a bad way to go. I mean, yes we just had ridiculous boom and will have a painful crash, but there will be another boom starting at least in 5 to 7 years and appreciating then would more than justify having a house as long as I don't over pay too much or bite more than I can handle...</p>

<p>Do those lenders still use 28% DTI ratio for monthly payment calculation or 33% as <a href="http://www.eloan.com">www.eloan.com</a> use as assumption? </p>
 
<p>I just don't know how W2 earners got these loans. If I remember correctly: a copy of your business license was needed; the DBA had to be more than 2 years; bank statements or certified financial statement to show proof of income.</p>

<p> </p>
 
<p>Let me clarify. This 100% financing was for self-employed individuals with proofs. I don't think they do 100% for wage earners.</p>

<p>IR, is correct. This stated income product will only be made available for the self-employed. It's not like the good old days where anybody and everybody can go stated. </p>
 
all i know is that lending standard is still pretty easy compare to the mid 90's.



friend/coworker went though eloan.com full doc. and it was a conforming loan. 100% finance and her rate was 5.5 (first only) i was amaze when she told me. they are closing escrow this week. the other one close escrow in mid dec and her rate was 7.5 total first and second.
 
NSR, i don't know if what was stated on the loan doc is exactly what he and his wife makes but he can afford this house... He makes 6 figures w2 and she owns her own business. countrywide made the loan.
 
When credit tightens, old lending programs are typically not eliminated, they are just scaled back through more stringent qualification standards until virtually nobody qualifies. It is not the presence of these programs, it is their limited availability that causes their impact on the market to lessen. Sales volumes are 80% off the peak. This is directly related to the tightening lending standards. Those few transactions that are occurring are probably still using some form of toxic financing because this is the only way to raise the money to buy at today's still-inflated prices. Transaction volumes will not pick up significantly until prices drop to the point people can use conventional financing because conventional financing is the only way the masses will qualify for a mortgage loan.
 
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