Mortgage lenders put too many borrowers into unsuitable mortgages
What happened to income verification and the ability to pay?
Well, the answer is the financial industry must determine a borrower's capacity to pay and now new rules will force borrowers to prove their ability to pay to prevent mortgage defaults and foreclosures.
During the real estate boom unscrupulous mortgage brokers, lenders and borrowers often distorted income or assets, forged documents, inflated appraisals, and misrepresented a borrowers' intent to occupy a property. During the past years it was very common to get a mortgage loan without any proof of income. Mortgage brokers would often "fix" the necessary documents to obtain a no income loan. This led to an alarming number of homeowners in houses that never should have qualified for. Worse still, when a bank would ask for income verification, there would really be no assurance that the documents were accurate. In the relatively small lending subsector called "subprime", documentation became a fluid concept. Meanwhile document falsification was very common and very easy to find on the internet. This at the same time that documentation hurdles were being lowered almost everyday.
Mortgage originators were not paying attention to these unscrupulous home loans and the borrower's capacity to pay because they could sell these mortgages easily. These bad mortgages ultimately became the reason why many financial institutions holding this paper are now facing bankruptcy. Real income verification can solve this problem. This lack of regulation has caused historical default and foreclosures records in states such as California, Florida and Nevada. Now 65% of all foreclosures in the U.S can be traced back to those three states. Since year 2005 these 3 states showed the highest default and foreclosure rates in the United States.
Lenders should spend more time verifying a prospective borrower's income and employment. If you want to know more about how to solve this mortgage mess, visit abilipay.com. This site provides remarkable quotes regard ingmore regulation and control on income verification and the ability to pay for all home loans in the U.S.
What happened to income verification and the ability to pay?
Well, the answer is the financial industry must determine a borrower's capacity to pay and now new rules will force borrowers to prove their ability to pay to prevent mortgage defaults and foreclosures.
During the real estate boom unscrupulous mortgage brokers, lenders and borrowers often distorted income or assets, forged documents, inflated appraisals, and misrepresented a borrowers' intent to occupy a property. During the past years it was very common to get a mortgage loan without any proof of income. Mortgage brokers would often "fix" the necessary documents to obtain a no income loan. This led to an alarming number of homeowners in houses that never should have qualified for. Worse still, when a bank would ask for income verification, there would really be no assurance that the documents were accurate. In the relatively small lending subsector called "subprime", documentation became a fluid concept. Meanwhile document falsification was very common and very easy to find on the internet. This at the same time that documentation hurdles were being lowered almost everyday.
Mortgage originators were not paying attention to these unscrupulous home loans and the borrower's capacity to pay because they could sell these mortgages easily. These bad mortgages ultimately became the reason why many financial institutions holding this paper are now facing bankruptcy. Real income verification can solve this problem. This lack of regulation has caused historical default and foreclosures records in states such as California, Florida and Nevada. Now 65% of all foreclosures in the U.S can be traced back to those three states. Since year 2005 these 3 states showed the highest default and foreclosure rates in the United States.
Lenders should spend more time verifying a prospective borrower's income and employment. If you want to know more about how to solve this mortgage mess, visit abilipay.com. This site provides remarkable quotes regard ingmore regulation and control on income verification and the ability to pay for all home loans in the U.S.
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