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Case Studies -->>
Stated Income Programs - Temporarily Discontinued
Stated income programs are mostly used by self employed people and wage earners
who can not verify income or choose not to disclose income.
Example: A general contractor who has been self employed for over two years is
interested in purchasing a property. He/she fears that the application will
be turned down because the net profit showing on the tax returns can not
support the mortgage payment, taxes and remaining debt. His middle credit
score is 700 with a proven ability to pay his creditors. The loan was
granted because he has been self employed for two years; the score is high
and can pay 10% for the down payment. Income documentation is not required
hence "Stated Income".
Qualifications
- Salaried employee - wage earner employed by a company or corporation
for the past two years in the same line of business. A change in employment
within two years is accepted but must be in the same line of business.
- Self Employed - business owner who has owned the business for two or more years.
- Passive Income - waitress or bartender who has been in the same
line of business for the past two years.
- Fixed Income - Social Security Income, Pension, Permanent
disability - all case by case.
- Credit(FICO) score must be 700 or higher to qualify for conventional
programs and 620 for subprime programs (problem/bad credit).
Reasonability Test
- Income on the application must appear reasonable to the applicant’s
location, occupation and length of experience.
- Income stated on the application must be specific to the borrower.
- Applicants where fixed income is the only source of income will be
reviewed on a case by case basis. Applicant must be of retirement age or
document supporting status of retirement that will continue for a minimum of 3 years.
Employment verification and business verification
- Wage earners require a verbal verification from the lender to
verify length of employment, position, and probability of future
employment. Salary or wages are not to be verified.
- Self Employed borrowers require a letter from the accountant
to show prepared tax returns under the specific business name for
two or more years.
- A copy of the EIN number from the state dated two or more
years prior to application.
- Certification of Organization from the state recorded two
or more years ago.
- Other documentation is reviewed on a case by case basis.
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