Morgage bailout bill explained

[drunkle]

“You must have current debt to income ratio above 35% to qualify.”

does that mean what i think it means? who is this bailout aimed at?

ex-sd: every idiot in washington is a bleeding heart socialist. it just depends on which social circle they belong to.

[SK in CV]

The debt to income ratio of 35% is related to the loan being refinanced, not the new loan. Borrowers who have a smaller ratio typically don’t need to refinance, and the bill is designed to aid borrowers that are already distressed, ergo, the requirement for more than 35% on the old loan.

One of the other key terms of the bill requires that the borrower could not have lied on the original loan application. Income and assets cannot have been overstated. This will exempt a significant percentage of sub-prime loans that might otherwise qualify. It renders the bill almost meaningless. Significant for those few that might qualify, but nowhere near the 500,000 estimated by the CBO.

[SK in CV]

The debt to income ratio of 35% is related to the loan being refinanced, not the new loan. Borrowers who have a smaller ratio typically don’t need to refinance, and the bill is designed to aid borrowers that are already distressed, ergo, the requirement for more than 35% on the old loan.

One of the other key terms of the bill requires that the borrower could not have lied on the original loan application. Income and assets cannot have been overstated. This will exempt a significant percentage of sub-prime loans that might otherwise qualify. It renders the bill almost meaningless. Significant for those few that might qualify, but nowhere near the 500,000 estimated by the CBO.

[SK in CV]

The debt to income ratio of 35% is related to the loan being refinanced, not the new loan. Borrowers who have a smaller ratio typically don’t need to refinance, and the bill is designed to aid borrowers that are already distressed, ergo, the requirement for more than 35% on the old loan.

One of the other key terms of the bill requires that the borrower could not have lied on the original loan application. Income and assets cannot have been overstated. This will exempt a significant percentage of sub-prime loans that might otherwise qualify. It renders the bill almost meaningless. Significant for those few that might qualify, but nowhere near the 500,000 estimated by the CBO.

[SK in CV]

The debt to income ratio of 35% is related to the loan being refinanced, not the new loan. Borrowers who have a smaller ratio typically don’t need to refinance, and the bill is designed to aid borrowers that are already distressed, ergo, the requirement for more than 35% on the old loan.

One of the other key terms of the bill requires that the borrower could not have lied on the original loan application. Income and assets cannot have been overstated. This will exempt a significant percentage of sub-prime loans that might otherwise qualify. It renders the bill almost meaningless. Significant for those few that might qualify, but nowhere near the 500,000 estimated by the CBO.

[SK in CV]

The debt to income ratio of 35% is related to the loan being refinanced, not the new loan. Borrowers who have a smaller ratio typically don’t need to refinance, and the bill is designed to aid borrowers that are already distressed, ergo, the requirement for more than 35% on the old loan.

One of the other key terms of the bill requires that the borrower could not have lied on the original loan application. Income and assets cannot have been overstated. This will exempt a significant percentage of sub-prime loans that might otherwise qualify. It renders the bill almost meaningless. Significant for those few that might qualify, but nowhere near the 500,000 estimated by the CBO.

[Eugene]

One of the other key terms of the bill requires that the borrower could not have lied on the original loan application. Income and assets cannot have been overstated.

That is debatable. The exact phrase used in the bill is as follows

“The mortgagor shall provide a certification to the originator of the mortgage that the mortgagor has not knowingly, or willfully and with actual knowledge furnished material information known to be false for the purpose of obtaining the existing mortgage or mortgages”

so, for starters, there’s no way for FHA to verify this certification, (maybe the borrower did earn $100,000 back in 2005 but he lost his job since, and now he makes $30,000?) and there’s no requirement that anyone goes and digs up old tax returns as proof.

Furthermore, even if income/assets were overstated, there is a valid defense, that is “I didn’t do it, I don’t know how that $100,000 annual income figure got on the application, it must be that evil agent, all I did was sign on the dotted line, I wasn’t really paying attention to the fine print”.

[Eugene]

One of the other key terms of the bill requires that the borrower could not have lied on the original loan application. Income and assets cannot have been overstated.

That is debatable. The exact phrase used in the bill is as follows

“The mortgagor shall provide a certification to the originator of the mortgage that the mortgagor has not knowingly, or willfully and with actual knowledge furnished material information known to be false for the purpose of obtaining the existing mortgage or mortgages”

so, for starters, there’s no way for FHA to verify this certification, (maybe the borrower did earn $100,000 back in 2005 but he lost his job since, and now he makes $30,000?) and there’s no requirement that anyone goes and digs up old tax returns as proof.

Furthermore, even if income/assets were overstated, there is a valid defense, that is “I didn’t do it, I don’t know how that $100,000 annual income figure got on the application, it must be that evil agent, all I did was sign on the dotted line, I wasn’t really paying attention to the fine print”.

[Eugene]

One of the other key terms of the bill requires that the borrower could not have lied on the original loan application. Income and assets cannot have been overstated.

That is debatable. The exact phrase used in the bill is as follows

“The mortgagor shall provide a certification to the originator of the mortgage that the mortgagor has not knowingly, or willfully and with actual knowledge furnished material information known to be false for the purpose of obtaining the existing mortgage or mortgages”

so, for starters, there’s no way for FHA to verify this certification, (maybe the borrower did earn $100,000 back in 2005 but he lost his job since, and now he makes $30,000?) and there’s no requirement that anyone goes and digs up old tax returns as proof.

Furthermore, even if income/assets were overstated, there is a valid defense, that is “I didn’t do it, I don’t know how that $100,000 annual income figure got on the application, it must be that evil agent, all I did was sign on the dotted line, I wasn’t really paying attention to the fine print”.

[Eugene]

One of the other key terms of the bill requires that the borrower could not have lied on the original loan application. Income and assets cannot have been overstated.

That is debatable. The exact phrase used in the bill is as follows

“The mortgagor shall provide a certification to the originator of the mortgage that the mortgagor has not knowingly, or willfully and with actual knowledge furnished material information known to be false for the purpose of obtaining the existing mortgage or mortgages”

so, for starters, there’s no way for FHA to verify this certification, (maybe the borrower did earn $100,000 back in 2005 but he lost his job since, and now he makes $30,000?) and there’s no requirement that anyone goes and digs up old tax returns as proof.

Furthermore, even if income/assets were overstated, there is a valid defense, that is “I didn’t do it, I don’t know how that $100,000 annual income figure got on the application, it must be that evil agent, all I did was sign on the dotted line, I wasn’t really paying attention to the fine print”.

[Eugene]

One of the other key terms of the bill requires that the borrower could not have lied on the original loan application. Income and assets cannot have been overstated.

That is debatable. The exact phrase used in the bill is as follows

“The mortgagor shall provide a certification to the originator of the mortgage that the mortgagor has not knowingly, or willfully and with actual knowledge furnished material information known to be false for the purpose of obtaining the existing mortgage or mortgages”

so, for starters, there’s no way for FHA to verify this certification, (maybe the borrower did earn $100,000 back in 2005 but he lost his job since, and now he makes $30,000?) and there’s no requirement that anyone goes and digs up old tax returns as proof.

Furthermore, even if income/assets were overstated, there is a valid defense, that is “I didn’t do it, I don’t know how that $100,000 annual income figure got on the application, it must be that evil agent, all I did was sign on the dotted line, I wasn’t really paying attention to the fine print”.

[SK in CV]

If the FHA is providing insurance on the loan, I assure you they will demand old tax returns, specially if they’re as recent as 2005 (That’s still an open year for IRS audits), if current income couldn’t have supported the original loan that is being refinanced. You’re right on the “I didn’t know” defense. But only if it’s credible. (A handwritten preliminary loan app, in the borrowers handwriting, for instance might mke that defense not credible) The FHA has a long history of demanding stringent underwriting standards. The last 4 years have helped many in the industry to forget the headaches of getting an FHA loan funded. They have never made it easy. I don’t suspect that will change.

[SK in CV]

If the FHA is providing insurance on the loan, I assure you they will demand old tax returns, specially if they’re as recent as 2005 (That’s still an open year for IRS audits), if current income couldn’t have supported the original loan that is being refinanced. You’re right on the “I didn’t know” defense. But only if it’s credible. (A handwritten preliminary loan app, in the borrowers handwriting, for instance might mke that defense not credible) The FHA has a long history of demanding stringent underwriting standards. The last 4 years have helped many in the industry to forget the headaches of getting an FHA loan funded. They have never made it easy. I don’t suspect that will change.

[SK in CV]

If the FHA is providing insurance on the loan, I assure you they will demand old tax returns, specially if they’re as recent as 2005 (That’s still an open year for IRS audits), if current income couldn’t have supported the original loan that is being refinanced. You’re right on the “I didn’t know” defense. But only if it’s credible. (A handwritten preliminary loan app, in the borrowers handwriting, for instance might mke that defense not credible) The FHA has a long history of demanding stringent underwriting standards. The last 4 years have helped many in the industry to forget the headaches of getting an FHA loan funded. They have never made it easy. I don’t suspect that will change.

[SK in CV]

If the FHA is providing insurance on the loan, I assure you they will demand old tax returns, specially if they’re as recent as 2005 (That’s still an open year for IRS audits), if current income couldn’t have supported the original loan that is being refinanced. You’re right on the “I didn’t know” defense. But only if it’s credible. (A handwritten preliminary loan app, in the borrowers handwriting, for instance might mke that defense not credible) The FHA has a long history of demanding stringent underwriting standards. The last 4 years have helped many in the industry to forget the headaches of getting an FHA loan funded. They have never made it easy. I don’t suspect that will change.

[Author]

Posts