Posted on 05/30/2008 1:13:58 PM PDT by nicola_tesla
I agree you’ll get the best rate by having the best credit, but even in the 70s people with good credit were paying in the teens for a loan. I shudder to think what people with mediocre credit were paying if they could even get a loan.
Search is your friend: http://calculatedrisk.blogspot.com/2008/05/bk-judge-rules-stated-income-heloc-debt.html
In case you are unaware, the 2005 BK law was supposed to “end” lien stripping. What this story says is that practice has returned even under the new law, at least in the case of 2ndary mtgs/loans. This is, as the article said, one judge making a ruling, which is likely to be cited in other cases and if challenged at appeal, will likely become precedent.
The author does not miss the point of stated loans. You need to read more of what this guy writes to realize he abhors the 2005-2007 tendency of bank to PREFER giving stated loans even to people who get W-2 as a way to loan up to 125% of the value of the house.
Heck, I’m self-employed and have been for 24 years. When I got my last mortgage in 2005 I took in my previous 2 years’ tax returns for a full-doc loan. There’s a good reason these were called liar loans - the people getting them were likely lying to the bank as well as to the IRS. However, even tho they lied, it doesn’t take away the bank’s obligation for due diligence before claiming harm.
Sorry you are having a hard time with reading comprehension. This guy writes succinctly and well. But if you don’t “get it”, read the calculated risk version - it says the same thing.
Even tho I’m not sick, I still just try to enjoy something about each day no matter what might go wrong, since we never know how many more of them we will get. :)
Newsflash right back - if you claim so many deductions/expenses that you show no/little income, then don’t complain that the bank thinks you can document none.
What you are saying is that a person should be able to fudge the numbers for the IRS, then unfudge them for the bank.
Sorry - one way or the other, you are still a liar. As any investigation into your bank account will prove.
Agreed there. Most likely they hid the ownership of the “toys” and used the exemptions part of the BK law to shield their home. In Florida, I believe, you can shield your home from being taken in a Ch 7 BK even if your home is worth millions.
nonsense.
allowable deductions are not illegal. It is not fudging it is a matter of having competent professionals.
If you need an analogy, look at major corporations that pay zero or next to no tax and yet investors see value in the corporation to buy their stock.
What you are missing is that the banks used to require a more substantial downpayment to have a larger equity cushion. The “bubble” was created with the use of overvaluing the collateral.
homes could be bought in the 80’s and 90’s and before without issue.
Also keep in mind according to news reports 90+% of loans are being paid on time.
in FL it is 1/2 acre in a municipality and 120 acres in unincorporated areas that is homestead expempt.
However you have to now live in fl for a set period. (2 years)
Even PRE=reform you could not buy an expensive home for an safehabor tool to evade creditors. (statute of frauds period 4 years, insider transfer period 1 year)
also that does not protect you for paying the first mortgage. (hence the inflated valuations)
You are still confused.
This issue is one of bankrucy reform.
The reform has been a failure. The means test is a joke as it only affects less than 25% of filers and then some legitimate preplaing avoids it.
The blogger has no knowledge of the law. They are misreading this in context of past law. There are other “luxury purchase” cases that were equally dumped.
This is just following established case law from even pre 2005 code.
But that is ok, amature do it yourselfers are good for business.
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