Yes, It Occurred When There Was No Document Mortgage
Yes, It Occurred When There Was No Document Mortgage
Not long ago, getting a mortgage was as easy as going to a bank, signing some paperwork, and walking out with the loan. This practice of issuing mortgages led directly to the credit crunch of 2007, which devastated the economy. Subprime mortgage loans are still in use today, and they are responsible for a lot of problems for borrowers. People got behind on their mortgage payments and the foreclosure rate increased dramatically due to soaring interest rates and other problems. A no-doc mortgage was another form of subprime lending that happened at that time. Can you tell me about this mortgage?
The term "no doc mortgage" refers to a certain kind of mortgage that can be approved without the need for income verification paperwork. A person's credit score and their seeming capacity to repay the loan were sometimes the only criteria used to provide these kinds of mortgages. Many individuals were given these for free, and they gave them the chance to own a home even if their income was modest. It was a great chance for some people, and they are still reaping the benefits of it.
People who work for themselves are one type of borrower who could qualify for a no-doc mortgage. While filing their taxes, many business owners may not appear to have made a tidy profit. Their tax preparation is not dishonest; rather, they simply employ a modicum of imagination each time they look at the figures. They can end up showing zero or very little income for the year since they write off every single item that could happen. These borrowers were unable to get a traditional loan due to their tax returns, even though they had the financial means to repay the loan.
The number of lenders offering no-doc mortgages is quite low, which is particularly frustrating for people who have the income but can not prove it. The present economic slump has hit most lending institutions hard, so they are hesitant to take a stand. So, to get into a home right now, you might have to seek out alternative financing options.
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