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Thursday, 21-Nov-2013 13:11 Email | Share | Bookmark
No-doc, Low-doc Loans May Help People Who Lack Steady Job, Incom

The Lowdown on Low-Doc Loans

What about people with the opposite problem -- people who have good scores and credit histories but do not have regular, steady jobs with easy-to-verify incomes? Meyer says that even though Las Vegas probably has more people who fall into this category than most other cities, every city has its own self-employed people, seasonal workers and entertainers. Las Vegas also has more than its fair share of those who earn a lot more money in addition to their hourly pay because of tips. There are also people who have just moved into a new community or state and are looking for work. People like this are usually better off with a "no-doc" (no documentation) or "low-doc" (low documentation) loan, Meyer says. As this website the names imply, these types of loans require fewer documentations than a conventional loan. "There are people whose W2 forms show that they make $30,000 a year, but they actually make $50,000 a year or more because of tips," he adds. "With their documented income, they cannot qualify for a loan to buy the sort of home that they actually can afford." Meyer says that with a no-doc loan the lender still looks at the appraisal, title documents and other standard paperwork to make sure they are in order. <br>For the original version including any supplementary images or video, visit

Wall Street rating agency Standard and Poor's says volume jumped by 50 percent from mid-2005 to mid-2006, based on mortgage securities pools it analyzed and rated. Unlike in earlier periods, however, today's low-doc borrowers are much more likely to be people who could, but choose not to, document their income with W-2 forms or pay stubs. According to a comprehensive survey sponsored by Inside Mortgage Finance and conducted by Campbell Communications, 39 percent of all low-doc borrowers this year are salaried wage-earners, the same percentage as self-employed borrowers. Why do they prefer to go the low-doc route? Survey designer Geosegment Systems of Nashua, N.H., asked a representative national sample of 2,140 mortgage brokers active in the limited documentation field this question and came up with some eye-opening answers. While 63 percent of brokers said they knew their self-employed clients had "unreported income" that they wanted to keep off the record, 71 percent said their borrowers' applications were dependent on additional income "from a household member with poor credit." For example, say a married couple earns $10,000 a month, but one spouse had filed for bankruptcy or lost a house in a previous marriage. Most lenders would want to know about that in order to underwrite the new mortgage and charge an interest rate high enough to cover the added risk. <br>For the original version including any supplementary images or video, visit >]content

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