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The Lowdown On Low-doc Loans

Generally, applicants are required to have good credit histories, but at the extreme -- no income verification, no asset verification, or NINA -- they need not document much of anything to qualify. The attraction of such mortgages for lenders or brokers is that they come with higher rates and compensation for the loan originator. Low-documentation mortgages were only a small fraction of the market in the 1990s, but today they are big business. This year they represent more than 16 percent of all new home loans, according to Inside Mortgage Finance, a Bethesda trade publication. Wall Street rating agency Standard and Poor's says volume jumped by 50 percent from mid-2005 to mid-2006, based on mortgage securities pools it analyzed and rated. Unlike in earlier periods, however, today's low-doc borrowers are much more likely to be people who could, but choose not to, document their income with W-2 forms or pay stubs. According to a comprehensive survey sponsored by Inside Mortgage Finance and conducted by Campbell Communications, 39 percent of all low-doc borrowers this year are salaried wage-earners, the same percentage as self-employed borrowers. Why do they prefer to go the low-doc route? Survey designer Geosegment Systems of Nashua, N.H., asked a representative national sample of 2,140 mortgage brokers active in the limited documentation field this question and came up with some eye-opening answers.
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Low Doc Loans


He popped in to studio mid-week (as he regularly does) to talk through some of the issues about them with Linda Mottram. It didnt take long before the calls started pouring in. Stephen Long appears regularly on 702 Mornings with Linda Mottram on Wednesdays after 9:30am. PS After Stephen left the studio at 10am, David called in. We felt his experience was also worth a replay.
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High risk home loans

Absurd court cases

More stories from reporter James Thomas If you can't service the debt, you'll end up in the poor house, and that is a poor strategy, Switzer confirmed. However he also says the fact that low docs are coming back is a sign that we are getting back to a more normal situation. Low doc loans provide small businesses with opportunities to get loans after being rejected by banks. Because they don't have an employment record like a public servant, as a consequence, low doc loans have a valuable function in the lending market. That is not to say all people should get low doc loans. CEO of comparison site Mozo, Rohan Gamble says his company has surveyed 25,000 people to determine the best loans on the market. Yahoo!7 Finance: RBA slashes rates to three year low The banks need to be better at their credit assessments, and not get us all into trouble, Gamble said. This year ME Bank has been rated the best home loan on the market. ME Bank tend to get rated very highly on service and trust as well. Second on the charts was Newcastle Permanent. Top 10 home loan rates in Australia from Moneyhound An organisation which has been around more than a hundred years, I think in the case of Newcastle Permanent, it is the longevity. We like to know our bank is going to be around, Gamble said.
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