Are Stated Income Loans Good For The Market?
Stated income loans are often associated with the disreputable lending practices which took place during the run up of the mortgage meltdown. The housing crisis of 2007/08 was a crash course which depicted how the crafty yet corrupt practice of unscrupulous lending and business practices meant to serve the few at the cost of many can have profound effects on the economy and society as a whole. As we examine what went wrong and attempt to diagnose the problems in the mortgage lending business, regulators have enacted safeguards in an effort to protect borrowers and prevent lenders from taking part in the same practices which led to the crisis in the first place. But as time goes on and markets continue to rebound, stated income loans are reemerging which leads us to pose the question; are stated income loans good for the market?
The stated income loans of today are much different form the stated income loans of the mid 2000’s. If we are to prevent what happened in 2007/08, why would we want stated income loans to reappear in the market? Wouldn’t they cause lenders to veer down the path of unethical lending in order to turn a profit? Well, the answer is we would expect that lenders have learned from their mistakes and would never wish for the effects of the financial crisis to reoccur. But just to be sure, lenders now hold borrowers to higher standards and require that they have good credit an a valid source of income before approving them for a stated income loan. The truth is, stated income loans were created as a viable means for self employed borrowers to acquire financing for their real estate purchases. And today, the amount of self employed individuals is rising, which doesn’t represent a threat but an opportunity for growth and stability in the real estate market. But if these individuals were to be unable to receive funding, that opportunity would be lost. Inefficiencies would take place in the market where capacities for production would not be met and purchases would continue to decrease. Stated income loans are good for the market, and it is up to both the borrower and lender to decide whether or not the loan is right for them.
For more information about stated income loans, contact HML Investments today to speak with a specialist.