Stated Income Loans – A little history

There was a time when stated income loans actually served a purpose other than lining the pockets of the Wall St elite while our economy went down in flames.  In fact, stated income loans have actually existed for a very long time.

You may not know this but before the Recession and before Wall Street started securitizing mortgages, banks would do stated income loans for good clients.  (They just didn’t have a name for them).

Click here for previous post detailing complete guidelines of new stated income loan program.

Basically, it went down like this.  The bank’s “loan committee” would meet every week or two and look over the various deals brought in by their bankers from the community.  They would go through each one and see which had merit.  If they approved a loan it was going to end up on their books (not sold on Wall St), so the committee had to like the loan and it didn’t have to meet Fannie Mae or Freddie Macs guidelines. It just had to make good sense.

It Was All About Character

Many of the loan applications looked at were for local business people who the bank’s upper management had first hand knowledge of, and who also had money in the bank and a well known business.  Many of these people were the typical self-employed business owners with “good” accountants and they could not qualify for traditional financing, but they were very good credit risks…and, as you might imagine, their loans were approved based on the fact that they had good credit, good businesses, good equity and above all good character.

Well…maybe enough time has passed and enough damage has been repaired (or perhaps short term memory loss is involved), but a few stated income and some “no income verification” loan programs are reappearing for both residential and commercial/investment property types.

Commercial Stated Loans – Only For Pros

Stated and no income loans for commercial properties (including 1 to 4 family investment properties) are now available on a limited basis.  The programs are only for those borrowers financing investment properties (those that do not provide shelter for one’s family) and are purely for business purposes.

This new version of a commercial no income loan requires at least 30% down payment or 30% equity, so there is at least one high hurdle a borrower must clear to qualify.  This is good news. as it makes me think the lenders offering the program have designed it only for those who theoretically know what they are doing.

Please get in touch if I can be of assistance with commercial property financing : jking (at) green commercial capital (dot) com.