November 27, 2007
Get high on 0 down
In case you missed it, the Seattle suburbs are the center of the home grown pot operation universe, brought to you courtesy of the so-called “liar loan,” which allows (or allowed) people to get a loan without proof of income.
Steve Heaney, the president of the chapter of the Washington Association of Mortgage Brokers said:
“I don’t think anybody in my industry — other than the bad guys, and I believe they’re a very small percentage — really want to facilitate the drug dealers. But if we eliminate completely loans with alternative documentation, there’s certainly a lot of legitimate Americans who aren’t going to be able to buy a home,” Heaney says.
And he means Americans who make a lot of income that isn’t easily documented. Like drug growers?
February 13th, 2008 at 10:41 am
No, I mean the hundereds of thousands of small business owners that make America strong. How about the owner of the pizza shop around the corner from your home. The guy that for 15 years has given back to the community, paid his taxes and is an up standing citizen. The guy that does not get pay stubs and W2’s like wage earners and has a hard time fully documenting his income!!
February 13th, 2008 at 10:46 am
Steve, thanks for stopping by. Just giving you a hard time. There are definitely legitimate reasons for no-documentation loans (”liar loans”), but there were also a lot of people who got them illegitimately.
At least drug dealers have the income to back up their payments, right?
May 7th, 2008 at 6:59 am
Sorry it has been so long, no time to surf the blog zone. Dramatic changes and continued constricting of lending products. For the most part it is a welcomed reaction to the “Stupid” loan products that the banks made available. They are now licking their wounds and in some cases over reacting with both products and pricing. The big banks are still trying to throw the “Brokers” under the bus for the problems. The reality is that Brokers do not make up the products, do not underwrite the products and do not fund and service the loans. Brokers can only offer loan products that the banks make available and in approx. 2/3 of the loans in America do it more efficiently and less expensive than the big banks. The problem Brokers have is that they do not have the deep pocket big lobby funds that the banks do! While Brokers do 2/3 of the loans in America, they are comprised of mostly independent small business. Truly the backbone of America, these small business averaging 7 employees can not play on the same political level that the big banks can. Are there bad brokers out there….sure. Just like there are bad insurance agents, and real estate agents. The vast majority of Brokers are honest hard working Americans. Brokers are more regulated by the states and can not hide behind national “exemptions”. Brokers are the only ones who actually disclose their total compensation to consumers, banks do not have to! The biggest press stories that you hear about fraud try to throw brokers under the bus, ironically the players are actually banks! What testimony to the power of big money…create the problem but have the finger pointed in the other direction!
After rambling…the drug dealers are having an increasingly hard time with loans. No-doc or Liars loans are all but non existent. As a result of this tightening, we are having challenges with legitimate small business owners whose tax returns are being sliced and diced by underwriters. Most small business owners take allowable write off’s that legitimately reduce their adjusted income and tax liabilities, this is part of the engine that drives American economy. It is increasingly difficult to “Ratio” these people with no allowances or add-backs for their income. It does not matter that they have always paid their bills, have a credit profile in the top 5% of the country, and have had a stellar credit history. Perhaps as the pendulum swings back we will find equilibrium again to keep the bad guys out and help the good guys. The reality is that whether it is this year or next, the market will loosen up and some one will step out and make stupid loans again! These stupid lenders will go out of business and die! Hopefully this Darwinian balance can keep things stable with the politicians getting involved.
After rambling…the drug dealers are having an increasingly hard time with loans. No-doc or Liars loans are all but non existant. As a result of this tightening, we are having challenges with legitimate small business owners who’s tax returns are being sliced and diced by underwriters. Most small business owners take allowable write off’s that legitamatly reduce their adjusted income and tax liabilities, this is part of the engine that drives American economy. It is increasingly difficult to “Ratio” these people with no allowances or add-backs for their income. It does not matter that they have always paid their bills, have a credit profile in the top 5% of the country, and have had a stellar credit history. Perhaps as the pendulum swings back we will find equilibrium again to keep the bad guys out and help the good guys. The reality is that whether it is this year or next, the market will loosen up and some one will step out and make stupid loans again! These stupid lenders will go out of business and die! Hopefully this Darwinian balance can keep things stable with the politicians getting involved.