MARI: Stated-Income Loans Invite Fraud
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One lender discovered that a large percentage of its customers who applied for stated-income loans exaggerated their incomes by more than 50%, according to the Mortgage Asset Research Institute.
The unidentified lender sampled 100 of its stated-income loans and checked the borrowers’ salaries with the Internal Revenue Service. “Ninety percent of the stated incomes were exaggerated by 5% or more,” MARI said in a recent report to the Mortgage Bankers Association.
“More disturbingly, almost 60% of the stated amounts were exaggerated by more than 50%.”
Lenders that don’t require income verification are opening the door to fraudsters, MARI warns. “These results suggest that the stated-income loan deserves the nickname used by many in the industry — the ‘liar’s loan’.”
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