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Within the last three months stated programs have been dropping like Mike Tyson’s opponents. A Stated program is a method in which a person’s true income is not verified by the lender. These programs were used frequently to qualify homeowners to buy or refinance their homes within the past years, but high risk loans combined with a declining market and a high foreclosure rate has driven wholesale lenders to rid the market place of these programs. Not to worry, because as I always say, “when one door shuts another one opens”. Fannie Mae, a shareholder-owned company, funded solely with private capital raised from investors on Wall Street and around the world has been accepting many hyper-extended loans through their Desktop Underwriter® system. What this means to you is that if most of your income goes towards your housing liabilities you can still qualify for a really good loan at a really good interest rate using your income documentation. Using compensating factors to balance the scale of qualifications has been the determining factor in qualifying for a conforming loan. For instance, if you have substantial funds saved in your bank or 401k you can use that as a compensating factor, or if you have a sufficient length of employment, this also helps. Having a high FICO score can also be used to compensate for other, less dominate qualifications. Within the next few months we will be seeing a lot of changes in the industry, but not all for the bad. If you recently attempted to refinance or buy a home and weren’t able to, try again in about 2 months. The industry should be seeing more doors opening.

Written by Steve Chavarria