Question:

Are stated income documentation loans legitimate?

Answer:

There is argument going on about the importance of stated income documentation loans and whether they should be disallowed. It turns out that, naturally, stated income loans have higher foreclosure rates compared to full doc loans. Also, stated income documentation loans allow for more abuse and regulators wonder should stated income loans be restricted in a way.

Even though stated income mortgages require less paperwork compared to full doc loans, there are no doc and no ratio loans allowing for much greater abuse than stated income loans.

Stated income loans provide for the greatest amount of reduced doc loans. NINA, No Ratio and No Doc loans are also popular but comprise a much lower percentage of the overall number of loans.

Even though sometimes even brokers prompt borrowers to twist the facts and figures a little, stated income documentation loans do allow it. Even if it is not very legitimate, the rules invite borrowers to do it. When the income and assets do exist, however, there is no big deal for using your partner's score and income to get a loan. However, severely exaggerating income does jeopardize your home.

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