Quote:
Originally Posted by MZ DAIZY
<< Remember back then, the toxic mortgages/securities came about because the lack of rules/regulations. In fact, a very popular loan then was the "no documents" loan, where people go could into a bank and claim they made $10000000000/year and did not have to show proof of it. Mortgage lending itself was very loose then and anyone could virtually qualify then. >>
Not entirely true. I got a no doc back in 2000. Put $170,000 down on a $330,000 home and they still put me through the wringer.
I remember getting pissed and telling my Broker that they should HOPE I default on this mortgage. She said “they are not in the foreclosure business, they’re in the mortgage business”. I’ll always remember that!
The only thing I didn’t have to show was a tax return.
As it tuned out, no Docs are back (i just got one last year). My broker said they realized most of them in 2008 didn’t default. It was the clowns that put 10% down, made 4 or 5 payments and then refinanced (taking equity) due to the rising housing costs and then walking away.
Was a pretty good scam I know a bunch of people pulled. Buy a $300,000 house, put $30,000 down, wait a couple of months, refinance at a lower rate, take $90 to $100,000 back in equity, spend that money on cars and vacations, default on loan, lose their $30,000 and their house, but pocket $60 to $70,000.
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If you were put through the wringer back then, with lack of regulations, then your situation must have put up alot of red flags. It was so much easier to qualify for a home loan then than it is now.
And the scams you mention are just the tip of the iceberg that contributed to the housing crisis. Alot of people were doing shady sh!t, including the ones you mentioned, but there was also alot of shady sh!t lenders were doing to push loans through (predatory lending).
No Doc Loans never went away, but alot of traditional lenders/brokers won't do them - too risky and it's most likely the hard-money lenders that will specialize in this. Remember, not all lenders/brokers offer the same types of loan programs, and one may specialize in one while the other doesn't.
Regarding tax returns, these are generally requested only if:
1. You have 1099/self-employment/rental income you are claiming.
2. You owe taxes.