Virginia mortgage rates and industry news

Some of our fine lender partners announced today that the very popular Stated income/stated asset loans will no longer be available as of June 1, 2008.  More importantly, many lenders will be imposing cutoff deadlines well before the June 1st date.  Fannie Mae, one of the leading purchasers of this loan, will no longer be purchasing these loans on 6/1/08, and expect the rest to follow suite.  The removal of this loan program will affect the traditional conforming "stated/stated" or SISA program loan limits up to $417,000. 

If you are unfamiliar with this type of loan, here are the basics.  A stated/stated loan allows the borrower to state (within reason) his/her income and assets.  The income and assets are not verified by the underwriter.  Instead, an underwriter will grade the borrower not on income or assets, but on credit, employment history, and "reasonableness". 

Why is this loan so popular?  Many self employed or highly commissioned borrowers earn much more income then they actually show on tax returns.  A typical borrower may actually earn twice as much as they show on their tax returns, mostly due to write offs or unreported income. 

Why is this loan so important to the housing industry, and what impact will it have when it's gone?  Since so many borrowers own small businesses or have jobs that earn a significant income in the form of commission, the removal of this type of loan may spell big trouble.  These borrowers may no longer qualify for a home they can actually afford, and may reduce their buying power to homes they can afford "on paper".  Since it's estimated that almost 40% of Americans earn income in this way, the removal of this program will be significant. 

What can you do about it?  If you are a borrower, or a Real Estate agent working with the type of buyer I've described, time is of the essence.  Now may be the best time to purchase or refinance a home while this special program is still available. 

Will stated loans go away completely?  No one knows for sure, but you can bet that if these types of loans are still available, they will come with a significantly higher cost to the borrower. 

Need more information?  Give me a call or drop me an email!

Paul Thistle, President - Loan Planet  (703) 753-5747  paulthistle@comcast.net