No Home Loans for Self-Employed

taxidriver_wideweb__470x310,0 New Orleans The draconian back door assault on citizen wealth continues as the impacts of new credit rules ripple through mortgage market and deny motivated – and qualified – buyers access to loans.  A quote in the Times today is revealing:  “Stuart Fraass of Guaranteed Rate Inc. ‘If you’re self-employed, you have virtually no chance of getting a mortgage now.’” Does this matter:  Hell, yes!  There are 20.4 million American workers that are self-employed!

In recent years sitting across the table from banks and sub-prime lending companies, we had this argument frequently over what was called “stated income” loans (I cover this at more length in my book, Citizen Wealth). Stated income allowed the potential borrower to prove their income in a variety of ways that substituted for the simple and standard W2 that a direct employee could provide.  This allowed tipped employees as well as self-employed workers to prove their incomes without W2’s.  The fact that many of the companies did virtually nothing to supervise the broker networks “manufacturing” of stated income loans was the problem (New Century had half of its portfolio in stated income loans right before the collapse!), not the existence of the loan itself.

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Foreclosure Mods Farce

WELLSFARGO-RATING/SANDPNew Orleans The scorecard is finally being written on the ballyhooed, though mostly baloney, loan modifications being done by big home mortgage loan servicers and trumpeted by the federal government (and largest shareholder in many of these outfits) as a real plan for foreclosure relief, and it stinks.  Gretchen Morgenson in a searing Times column today that rested on the analysis of Professor Alan M. White at Valparaiso University Law School of 3.5 million subprime and alt-A mortgages in securitization pools controlled by Wells Fargo, and led to the Times editorializing that banks need to start writing off principal, since they are losing their shirts anyway.

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