There have been many scapegoats in history.
Steve Bartman, the Chicago Cub fan who many believe cost the Cubs a trip to the World Series for the first time in nearly 60 years.
Bill Buckner, who made an error at first base that Red Sox fans believe cost them the 1986 World Series.
According to legend, some ancient cultures would sacrifice criminals in response to natural disasters.
I won't mention the political scapegoats. For many, even their mention is painful.
Scapegoats have been with us throughout history. Some people need them to give a face to catastrophes that are beyond rationalization.
To make the unexplainable easier to explain. To make it so we can look in the mirror and not see the problem.
If you read the comments in Active Rain, it's pretty clear. The scapegoat in the $900 billion mortgage crisis is the stated income loan.
It's all the stated income loans fault!! Liar loans. Borrowers being deceitful to qualify for homes they couldn't afford. Agents pushing loan officers to "go stated" to get their deals done. Unethical loan officers making up income to get the borrower's qualified.
Its soooooo obvious. That's the reason for the mess!!! Off with its head!!!!
The truth cannot be any further out in left field than one of those Sammy Sosa towering home runs hit out on Waveland Avenue in the incredible McGuire battle of ‘98.
The stated income loan has been with us many, many years as the loan of choice for the self-employed borrower. It came with a few stipulations. You had to be self-employed. You had to have great credit and a nice-sized down-payment. At least 20% down.
And historically, those loans had a very low default rate similar to full doc loans,
Then came the Millennium. A new century with new hope, spirit and revitalization. And with each year, the stated income loan became a little easier to get.
A little less credit needed. A little less down payment. A little less information about your job.
I can remember banks, backed by Wall Street, offering 100% financing for stated income borrowers with 620 credit scores and being salaried was acceptable....oh, yeah, one day out of bankruptcy OK too!!!
Did I sell those loans? Of course. And as opposed to many here, I refuse to apologize.
I believe, when you are in sales, you sell the products that you have in your inventory.
In my opinion, and many others, 100% financing for all borrowers, of all documentation types, all the way down to a 580 credit score and below fueled the greatest real estate explosion in history.
Speculators fueled it even more just as they had the stock market and tech stocks of the late 90's.
And just like the stock market, prices got too high for the investors to make money, they left, and we ended up with too much supply for the demand.
Depreciation set in. People had none of their own "blood" in the deal or even worse they had actually "profited" by draining the equity of their home in the hot market, so they walked.
Or their ARM that they had agreed to because they wanted the "lowest payment possible" and would simply "refinance" later adjusted and there was no longer a refinance opportunity.
There are villians and victims scattered all over this warfield.
The stated income loan is a small player in the colossal economic and emotional damage that the market is experiencing.
And like all scapegoats, history will eventually expose the truth.
Moises Alou played left field for the Cubs in 2003. He was the guy who was about to catch the second out of the 8th inning. The Cubs would be four outs away from their first World Series in 56 years with their best pitcher on the hill.
Steve Bartman, reached out for a foul ball, got in Alou's way, and in a nanosecond, destroyed the dreams of Cubs fans everywhere.
A few weeks ago, Alou, who now plays for the Mets, was talking to a reporter after a game. He told the guy, "The funny thing is I wouldn't have caught it anyway."
;)
Links;)
Tags (Tag Cloud);)
Archives
Posted by 
Hey Aaron, I totally agree that stated income loans have their place in this world. We bought our current house with one as I was a waitress with tip compliance when we bought it. We also had 10% down. We also took out a second to put in a pool. This was all prior to our boom. We still ended up with negative equity today when we had doubled our equity at the height.
Luckily we are fixed in our rates!
Look at all the pent up demand in our market as tipped income workers could not buy after the stated loans started disappearing. Prices had to go down tremendously for them to get into conforming loans. If we ever see such easy money again, we will see another boom again.