Stated Income Mortgage Loans in India

June 9th, 2010                                                                             Write Comment

Sriloans.com – This is a home loan where the lender allows the borrower to state their income, instead of providing documentation. In most mortgage loans scenarios, borrowers have to provide all sorts of documents to prove their income, assets, debts, etc. But with the stated income home loan, the lender basically takes the customer’s word as to their income level. These are also referred to as no-doc or low-doc loans, because they require less documentation. Traditionally, these loans have been used by borrowers who were self-employed, or those that earned most of their income from commissions. These people lack regular wages or salaries, so they were allowed to state their income level instead of providing pay stubs.

A stated income/stated asset loan (SISA) is a type of low-documentation loan. Your lender does not require any proof of your income or resources to pay back a loan.

Of course, qualifying for a stated income/stated asset loan is not always easy. At a minimum, you have to have good credit. Note that you are supposed to tell the truth about your resources even though they don’t ask for proof. Stated income/stated asset loans are useful for people who have difficulty showing consistent income, difficult-to-value assets, or those who want maintain privacy.

Stated Income Loans are Rare Today:
During the housing boom of the early to mid 2000s, stated income mortgage loans were used quite often. This was the heyday of “easy lending,” when lenders did anything they could to put people into mortgages. They found ways to defer interest to make loans more appealing, to approve borrowers with bad credit, and to reduce the amount of documents required. Stated income loans have been around for a long time, but they came to a peak in the mid 2000s.

These loans eventually became known as “liar loans,” because borrowers could say anything they wanted. In other words, they could inflate their income to qualify for a larger mortgage loan. This increased the amount of risk taken on by lenders, by increasing the likelihood of foreclosure. Between 2008 and 2010, we saw record numbers of home foreclosures in the India. A large percentage of these were from borrowers who used stated income mortgage loans.

As a result of all this, fewer lenders are offering stated income home loans today. Those that do offer them will charge a premium in the form of higher closing costs or interest rates. The rate for this type of mortgage is generally about a half-point higher than a comparable loan with full documentation. But this rate depends on the borrower’s credit score and other factors, so that general rule doesn’t always apply. The lender may charge additional fees as well.

sriloans.com (SISA) – This loan features no assets being verified. You only state your income and state your assets on the application.

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One Response to “Stated Income Mortgage Loans in India”

  1. kainet says:

    hi,

    Nice article, I just loved this amazing post by Mortgage loan blog. You guys are doing exceptional job in giving information that includes various aspects of loan types. Thanks!

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