Stated Income Loans: Are They Making A Comeback?

Late last week, I got an email from a lender with something I haven't seen for a while -- a stated income loan offering.

Are stated income loans making a comeback?

They are at one lender - which means that other lenders are likely to follow suit soon.

Highlights of the Stated Income loan offered at this lender:

• 720 Minimum Fico Required
• Self Employed Only
• 70% - $1,500,000 Purch./Rate - Term — Owner Occupied
• 60% - $1,500,000 Cash Out — Owner Occupied
• 60% - $1,000,000 Purchase — Non Owner
• Second Homes Allowed at 5%-10% LTV Reduction
• Maximum Cash Out — $325,000
• 12 Months PITI Reserves Required
• Minimum Loan Amount—$417,0003/1; 5/1; 7/1; and 10/1 ARM’s
• Available Rates start in the mid 4’s and range to the low 6’s
• Programs Available For Most States

Stated income loans were popular during the big real estate runup of the early-to-mid 2000's - and as the mortgage boom turned into a mortgage bust, all lenders that I was aware of eliminated their stated income loan offerings.

But in true business-cycle fashion, given a little bit of time - at least one lender is now back in the stated income game. And if my suspicions prove out - I bet there will soon be another lender in the stated income loan game... and then another. And another. Until they become a "regular" program again.

Let's just hope they figure out a way to keep the waitress who makes $2.13/hour plus tips from claiming that she makes $130,000/year as she buys a $415,000 house.

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