huh?
Who wrote this?
First off, from day one the “class” was a joke. Obviously the author knows nothing about the fact the class is a 30 minute telephone seminar.
Second the author does not know about the lien stipping of unsecured mortgage loans under the old vs the new code.
Third what the heck is the author trying to say? hence the “huh”? Was there a ruling? Has the law been shifted or did one judge make a ruling? Where is the ruling.
The author misses the point of stated loans. Stated income loans were for those who were self emplyed. Under the PREreform rules you had to have a larger deposit to make the stated loan. Usually 15% to 30%. After reform made the ENTIRE LOAN nondischargable, the banks were free to inflate the value of the house 15% to 30% and thus have a full value loan with the borrower having a second mortgage on the unsecured part.
The “delusion” part is the bank thinking they would be covered over time as the home value went up to meet the inflated valuation. (how many banks had “mandatory lists” for appraisers who would play ball, wink wink.)
The author needs a writing class.
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.