Stated Income: The Band That Is NOT Getting Back Together

Mortgage and Lending with Guaranteed Rate, Marin County, CA NMLS: 22343

Stated Income: The Band That Is NOT Getting Back Together


Not a week goes by that I don't get asked in some fashion, explicitly or implicitly, if stated income loans are coming back.  And at the risk of making this a record-short blog post (for me, anyway), let me cut right to the Blues-Brotheresque-police-car-smash-'em-up chase and tell you, "No, stated income loans are not coming back!" At least not in any conventional mortgage sense.  Here's why.


The not-so-new sheriffs in town are Chris Dodd and Barney Fife.  Er, I mean Barney Frank.  The law of the land is now the Dodd-Frank Wall Street Reform and Consumer Protection Act.  Where mortgages are addressed, a concept called "ability to repay," or ATR, is outlined.  In order to make a mortgage that stands a chance of having ANY legal protections should a consumer default or level a defense against the lender, the lender must be able to demonstrate the borrower's ability to repay.


Stated income gets right at the heart of ATR.  In short, the very appeal of stated income to a consumer is the ability to NOT have to prove capacity to repay.  So while you may hear about today's aggressive mortgage programs, alternative qualification methods (asset backed, etc.), etc., you will not find a residential mortgage untouched in some manner by ATR.  Even our alternative qualification programs that are "non-QM" still address, in some form or fashion, a borrower's ability to support the future loan payments.  "True stated" is a ghost and if you hear that it's come back, it's just a nightmare.


If you're purchasing or refinancing residential real estate and you need a mortgage that is consistent with what most would consider excellent, going-rate terms, you will be exposed to ATR in your loan process.  HELOCs fall outside of Dodd-Frank.  So does private money.  But these two programs are not typically the way a buyer or borrower would finance a primary home with a first lien.


Dodd-Frank and the CFPB are on a mission from God to enforce ATR, so as a result, the stated income band is not getting back together.  At least not any time soon.


Gimme some lovin', 



Robert J. Spinosa
Executive Loan Advisor
NMLS: 22343 
Cell/Text: 415-367-5959 Fax: 415-366-1590 
1058 Redwood Highway, Frontage Road, Mill Valley, CA 94941


LendUSA, LLC dba RPM Mortgage NMLS #1938   Licensed by the Department of Business Oversight under the California Residential Mortgage Lending Act. 


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stated income
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Anna Banana Kruchten CRB, CRS, Broker
Phoenix Property Shoppe - Phoenix, AZ
Arizona's Top Banana of Real Estate!

Who knows what will happen in the future. I have this feeling that somebody out there is once again going to figure out how to get around or get rid of D & F so they can make mega bucks. I hope not....but I know history.

Aug 24, 2017 10:51 AM #1
Dick Greenberg
New Paradigm Partners LLC - Fort Collins, CO
Northern Colorado Residential Real Estate

Hi Rob - I'm sure you're right. Stated income still has to be among the worst lending ideas ever, and they're still probably hunting down the guy that came up with it.

Aug 24, 2017 11:32 AM #2
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Rob Spinosa

Vice President of Mortgage Lending, Marin County
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