I'll admit to posting the excerpt below partly to "vent". I am amazed by the foolishness of many lenders and disappointed by the dishonesty of many home buyers.
I guess some obvious financial planning lessons are
(1) If you don't qualify for an amortizing (not interest-only) loan at
a good rate, that's a strong sign you are trying to live beyond your
(2) Home ownership has its advantages and disadvantages and is not for
A Cross-Country Blame Game
By VIKAS BAJAJ
Published: May 8, 2007
"The popularity of stated-income loans, derisively referred to as
"liar's loans" by critics, seemed impervious to evidence that the
loans made it easier for borrowers and brokers to commit fraud.
According to a report by the Mortgage Asset Research Institute, for
example, one lender found in a sampling of loan applications that the
incomes listed on 60 percent of the applications were, on average, 50
percent higher than those on the borrowers' tax returns.
Lenders liked the loans because they could be processed quickly. Loan
officers did not have to verify bank statements, tax returns or other
Borrowers also were charged a higher interest rate, often about 0.5
percentage point higher, making the loans more profitable."
- posted 12 years ago