"Transparency" has become a popular buzz word in our business.
A high level of intregity is expected. A real estate agent cannot tell the seller one version of the facts, and tell the buyer, or the other agent, a different version of the facts. Everybody is in the same loop.
Okey-dokey. Along comes the IRS, and the IRS says they like transparency a whole bunch, too. Homebuyers should not be claiming a "stated income" of $xxx,xxx when dealing with their lender, and stating an income of $xx,xxx when dealing with the IRS.
Here's a link to the story in the Washington Post.
"stated income" loans are meant to reduce paperwork. They were created for the self-employed or commissioned individuals whom do not have a sufficient two-year track record for a traditional mortgage approval.
eg-
I'm a 3rd year Realtors. I made $50K in 2004, I made 80K in 2005, I'm on track to make $150K this year. A traditional mortgage underwiting would peg my income as about 85K but I really make 10-12K a month. Stated income facilitates that.
They are the most abused loans in the system with the highest foreclosure rates. We need to go back anout 5 years for stated income loans and start using more NO doc loans; that will make borrowers think twice about buying homes with more stringemt downpayment requirements and higher rates.