The "You can REFI before the interest rate resets" and "Stated Income" B.S.!! Part Two
a) They were told they could Refi before the interest rate adjusted and
b) They were approved based on Stated Income.
I covered the Refi BS last time and so now I want to talk to you about a bigger bag of BS: STATED INCOME.
To illustrate my point, I want to tell you a true story about some friends of mine whose story truly encapsulates how much lying was going down during this whole housing boom.
This story begins with a couple who I had known for almost my entire life, John and Mary (these are fictitious names to protect their privacy)
John and Mary were two young professionals who were very much in love and decided that they were finally ready to buy a house together. Both of them were making good money for 25 year olds (combined income in the neighborhood of about $180k) and they both already owned property (she had a condo and he had a small rental property). With a budget and location in mind, they set out on their home search.
After looking at several houses in their price range, they decided to look at one that was WAY out of their budget just for fun. After a long day of searching they deserved a little break.
They walked into the 4 bedroom 2 bath beach house with no real hopes of ever buying the property. The place was pretty amazing. One block from the beach, next door to a professional athlete, etc.
It was listed at well over $1.1 million and wasn’t a piece of property that they thought they could afford even at age 45 let alone 25. However, after touring the open house with the agent they decided to put in an offer…just for fun.
This is where the story gets interesting.
Now in a normal world, there was no way that these two KIDS would ever be able to buy a $1 million+ property. However this was not the real world. This was “STATED INCOME-land" where greed was king and money grew on trees.
In a very formal meeting, the loan office and the two eager buyers sat in a room to make an offer on the property. Knowing that they were swinging for the fences, the loan officer knew he had to reach into his hat and pull out a rabbit to get this approved. He looked Mary straight in the eye and said “You make $350,000.00 a year, RIGHT?”. And then looked John straight in the eye and said “You make about $200,000.00 a year, RIGHT?”.
Mary and John looked at each other and hesitated for a split second. “What should we do?” they thought.
“Do we tell the truth? Do we go along with this? He’s the professional and he should know best…He’s here to help us.... And at the rate we’re getting we can afford this even with our REAL SALARIES, so what’s the big deal.”
And like a reflex, they both replied “Yes!!”.
The stated income figures went down on paper and the application was submitted. No pay stubs required.
Guess what happened next?
They got the house!!
Now these friends were lucky. They had a decent down payment and they were able to get a 30-year-fixed so they weren’t affected by the economic downturn. But, the lesson here is that even in the most upscale neighborhoods and with the most honest homeowners, the truth was being stretched and the law was being broken.
Can you imagine what was happening in less ethical neighborhoods? Or in neighborhoods where the home buyer didn’t speak English? Who knows what the loan officers were writing down on applications just to get a sale?!!
It’s despicable and is a true example of how greed was dictating the marketplace. And, now the homeowners are left to pick up the pieces while the brokers and loan officers moved on with their commissions.
Now I’m not sure if you fall into this category, but I need you to understand that we know what happened out there. We know about the deception and lies and we also know that you aren’t at fault for it.
The onus is on the realtor, the mortgage broker, and ultimately the lender to verify that the information provided in the loan application is accurate. After all, they’ve got a stake in the property, too.
But it looks like the banks forgot that last point.
So if you encountered this situation when you purchased your home and now are in trouble, let me tell you that we understand and it is our PRIORITY to help you get back on your feet.
If you’re not in this situation, but can see that the environment was rife with dishonesty and greed and now you’re behind on your own mortgage, please know that we can help you, too.
A FORENSIC LOAN AUDIT from Loan Audits Cal could be exactly what you need to get back on track and save your property. Please contact us today and we will work together to find a solution for you.
Sincerely,
Chris Martinez
Partner/Director of Sales and Marketing
Loan Audits Cal
Phone: 1.888.940.5550
Fax: 424.205.1702
Email: chris@loanauditscal.com
www.loanauditscal.com
Posted - 10/28/2010 | Comments (0)
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