Bernie Sanders
Related: About this forumWhat did she mean about homeowners paying extra fees...
...to avoid documenting their income?
Perhaps she should have told the homeowners to "cut it out?"
Adios...
floriduck
(2,262 posts)rated as riskier loans.
KansDem
(28,498 posts)My wife and I bought our current home 28 years ago. I didn't remember being offered this option.
Was it a relatively new concept?
unblock
(52,107 posts)the legitimate problem is that many people have income more than sufficient to pay a mortgage, but it is not in the form of a steady paycheck. consultants, sole proprietorships, etc.
stated documentation loans are a legitimate way to mortgages for such people.
the obvious problem is that people can lie, and because the incentives, the best person to check those numbers only had an incentive to close the deal, not an incentive to prevent a bad deal from closing.
so they started to become known as "liar loans" and in the days of easy credit, some originators actively encouraged applicants who shouldn't qualify for a mortgage to simply declare and adequate income and essentially pay a fee to not have to provide documentation to support that claimed income.
it was one of the contributing causes of the financial collapse, but ultimately its roots were in the banks' eagerness to invest in anything and everything as quickly as they could without doing proper due diligence.
mahina
(17,602 posts)Explanation of what went down, and how. They go into the process and outcomes in a very interesting way, no nonsense.
http://m.thisamericanlife.org/radio-archives/episode/355/the-giant-pool-of-money
I hope you like it. Please let me know what you think!
surrealAmerican
(11,357 posts)My first mortgage was a no-doc. Being self-employed, even with a steady income and good credit rating, left no other options.