Stated Income Loans—Now There's a Great Idea

Submitted by Rich Toscano on January 7, 2006 - 9:13pm

The folks at the Voice of San Diego are on a rampage with their continuing series on articles on housing-related chicanery. Their most recent piece focuses on mortgage fraud—specifically, the ever-popular stated income mortgage, otherwise known as a "liar's loan." While it's impossible to know how many people are overstating their incomes, the article quotes one mortgage professional as estimating (conservatively) that 25% of stated-income mortgages are fraudulent. Another mortgage executive acknowledged the "let it go" culture within the industry, supporting my frequent assertion that people tend to turn a blind eye to fraud as long as everyone is making money. This is an important topic, and we have by no means heard the last about it.

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