I heard a rumor today……all reduced documentation mortgages will be eliminated by FNMA and FreddieMac by the middle of this month (August, 2008).  Although the no-income verification loans have been gone for some time, lenders were still allowing “short-cut” loans.

 

A short-cut loan is one where a borrower with a credit score over 700, might only be required to verify active employment and NOT income.  FNMA and Freddie believed that if your score was high enough then you probably paid your bills on time. Well, not anymore…..

 

Stated income loans are now around for conforming loans but not Jumbo-Conforming (the new temporary loan amounts) nor Jumbo loans. Limited documentation loans are being eliminated soon.

 

So, where does that leave the borrower? Full documentation, provide your paystubs, W-2’s or last 2 years tax returns, no matter what your credit score is no exceptions!!

 

Of course, you can always look around and search for a lender that will do it, but what are their parameters?  I will verify this by the end of this week and re-post.

 

Dale Robyn Siegel