alexgaddis Posted July 31, 2007 Share Posted July 31, 2007 (edited) The new law regarding mortgage lending comes into effect tomorrow morning in Minnesota...they have basically gotten rid of the "stated" income loans...going to be much harder for people to refinance and buy new homes for a while... What bothers me most is that self-employed people looking to purchase are the ones who will get hurt the most...I understand the need to get rid of "stating" income for someone with W-2's but thanks to the legislature all the lenders are removing the stated options as of tomorrow... Edited July 31, 2007 by alexgaddis Quote Link to comment Share on other sites More sharing options...
Ursa Majoris Posted July 31, 2007 Share Posted July 31, 2007 The new law regarding mortgage lending comes into effect tomorrow morning in Minnesota...they have basically gotten rid of the "stated" income loans...going to be much harder for people to refinance and buy new homes for a while... Wait.....all they've done is ensure people provide documentation of their income and don't just make chit up - or, worse, have some semi-criminal mortgage broker make chit up for them. Quote Link to comment Share on other sites More sharing options...
alexgaddis Posted July 31, 2007 Author Share Posted July 31, 2007 (edited) Wait.....all they've done is ensure people provide documentation of their income and don't just make chit up - or, worse, have some semi-criminal mortgage broker make chit up for them. yes, but all the lenders have taken away everything but Full Documented loans... The law was SUPPOSED to put the proof in the hands of the brokers but every lender has pretty much gotten scared to even offer stated anymore...which sucks becuase we have client right now who owns a business that cannot buy a house because he writes off too much to qualify Edited July 31, 2007 by alexgaddis Quote Link to comment Share on other sites More sharing options...
wirehairman Posted July 31, 2007 Share Posted July 31, 2007 ...which sucks becuase we have client right now who owns a business that cannot buy a house because he writes off too much to qualify Perhaps, he should quit looking for tax loopholes and quit writing off so much. Quote Link to comment Share on other sites More sharing options...
H8tank Posted July 31, 2007 Share Posted July 31, 2007 Perhaps, he should quit looking for tax loopholes and quit writing off so much. Perhaps you should try and run your own business, lets see how happy you are with the myriads of taxes you have to pay. Quote Link to comment Share on other sites More sharing options...
wirehairman Posted July 31, 2007 Share Posted July 31, 2007 Perhaps you should try and run your own business, lets see how happy you are with the myriads of taxes you have to pay. Point well taken. I was just trying to point out it is a double-edged sword. Quote Link to comment Share on other sites More sharing options...
Puddy Posted July 31, 2007 Share Posted July 31, 2007 Perhaps you should try and run your own business, lets see how happy you are with the myriads of taxes you have to pay. Sorry H8, but the wired one has it right. If your expenses bring your NET NET down to a paltry 10 grand, don't expect to buy a nice home. How can you say on one hand that my business only affords me 10 grand but sure I can afford that 300k house on the cul de sac. Doesn't add up. Either pay Uncle Sam or rent an apartment (that doesn't do credit checks). Quote Link to comment Share on other sites More sharing options...
AtomicCEO Posted August 1, 2007 Share Posted August 1, 2007 Perhaps you should try and run your own business, lets see how happy you are with the myriads of taxes you have to pay. You could always get a real job. Quote Link to comment Share on other sites More sharing options...
Brewer Posted August 1, 2007 Share Posted August 1, 2007 Sorry H8, but the wired one has it right. If your expenses bring your NET NET down to a paltry 10 grand, don't expect to buy a nice home. How can you say on one hand that my business only affords me 10 grand but sure I can afford that 300k house on the cul de sac. Doesn't add up. Either pay Uncle Sam or rent an apartment (that doesn't do credit checks). Puddy, dropping knowledge. Quote Link to comment Share on other sites More sharing options...
Grimm74 Posted August 1, 2007 Share Posted August 1, 2007 Sorry H8, but the wired one has it right. If your expenses bring your NET NET down to a paltry 10 grand, don't expect to buy a nice home. How can you say on one hand that my business only affords me 10 grand but sure I can afford that 300k house on the cul de sac. Doesn't add up. Either pay Uncle Sam or rent an apartment (that doesn't do credit checks). FYI I know little about the new law enacted BUT People who show low incomes who own businesses in which they live in an expensive home are not criminals avoiding taxes. I for one am am one of those persons. I can go for long periods of time without paying YEARLY taxes. To make things simple I will talk in very vague and general terms. My situation and many others is not that simple, but VERY VERY common. Lets say you own ten rental homes and your net income is say $80,000,,,,,,but you are able to depreciate those homes down to the point where your IRS income is $5,000.......should I live in a house that a person who earns $5,000 a year or $80,000......Oh yeah I can live like this for 25 years, but guess what my man once I sell those homes the government recaptures that depreciation and uncle SAM gets his cash..ALL of it. The government should not make it harded for all of us living on this blue ball, b/c some stupid underwriters, brokers, home owners, and whoever else have done...The system will Josh Gordon them out. It is a growing pain we as a nation can get over it without the governments help I hope this explains some things to you. I am interested in your thoughts. Quote Link to comment Share on other sites More sharing options...
H8tank Posted August 1, 2007 Share Posted August 1, 2007 I show I make 10K but want a 300K house? Nice realistic example!!! Again, nice opinion with no idea of reality. Quote Link to comment Share on other sites More sharing options...
H8tank Posted August 1, 2007 Share Posted August 1, 2007 Regardless, have good credit, you don't have these problems generally. Worst credit prospects? Preachers, lawyers and little boys who make copies. Quote Link to comment Share on other sites More sharing options...
dmarc117 Posted August 1, 2007 Share Posted August 1, 2007 another one bites the dust Quote Link to comment Share on other sites More sharing options...
Puddy Posted August 1, 2007 Share Posted August 1, 2007 FYI I know little about the new law enacted BUT People who show low incomes who own businesses in which they live in an expensive home are not criminals avoiding taxes. I for one am am one of those persons. I can go for long periods of time without paying YEARLY taxes. To make things simple I will talk in very vague and general terms. My situation and many others is not that simple, but VERY VERY common. Lets say you own ten rental homes and your net income is say $80,000,,,,,,but you are able to depreciate those homes down to the point where your IRS income is $5,000.......should I live in a house that a person who earns $5,000 a year or $80,000......Oh yeah I can live like this for 25 years, but guess what my man once I sell those homes the government recaptures that depreciation and uncle SAM gets his cash..ALL of it. The government should not make it harded for all of us living on this blue ball, b/c some stupid underwriters, brokers, home owners, and whoever else have done...The system will Josh Gordon them out. It is a growing pain we as a nation can get over it without the governments help I hope this explains some things to you. I am interested in your thoughts. You bring up a good point about cash flow versus net income. In your example, you still have the annual cash flow to afford a decent house but non-cash expenses (depreciation) is bringing your income to a lower level. I would guess that this example is the exception and not the rule among small business owners, self-employed folks, etc. I would expect most in those situations have cash income and cash expenses where large depreciable assets are not what is brining in the income. Believe me, I know several small business owners and self-employed people who really do make enough to purchase that nice house. However, in their attempt to pay as little taxes as possible (who can blame them), they find 'other' ways for their net income to be low enough not to pay Uncle Sam. That's fine and dandy as long as they don't expect the same credit terms, etc. as people showing more annual income. Quote Link to comment Share on other sites More sharing options...
Grimm74 Posted August 1, 2007 Share Posted August 1, 2007 You bring up a good point about cash flow versus net income. In your example, you still have the annual cash flow to afford a decent house but non-cash expenses (depreciation) is bringing your income to a lower level. I would guess that this example is the exception and not the rule among small business owners, self-employed folks, etc. I would expect most in those situations have cash income and cash expenses where large depreciable assets are not what is brining in the income. Believe me, I know several small business owners and self-employed people who really do make enough to purchase that nice house. However, in their attempt to pay as little taxes as possible (who can blame them), they find 'other' ways for their net income to be low enough not to pay Uncle Sam. That's fine and dandy as long as they don't expect the same credit terms, etc. as people showing more annual income. You are absolutley correct that a no doc individual does not deserve the same terms as a doc b/c of the added risk. BUT you seem to like the fact that the government is regulating this. I think this is VERY bad. The people who caused all of these issues will be weeded out natualy. The uderwriters will go out of business, the brokers will as well, and companies will tighten their standards.......Why in the world does the government need to step in? Quote Link to comment Share on other sites More sharing options...
Puddy Posted August 1, 2007 Share Posted August 1, 2007 You are absolutley correct that a no doc individual does not deserve the same terms as a doc b/c of the added risk. BUT you seem to like the fact that the government is regulating this. I think this is VERY bad. The people who caused all of these issues will be weeded out natualy. The uderwriters will go out of business, the brokers will as well, and companies will tighten their standards.......Why in the world does the government need to step in? I don't see where I embraced legislating it. My first response was merely trying to make a point why many self-employed's will not qualify for a traditional mortgage while minimizing their tax liability at the same time. I have ZERO sympathy for the mortgage companies who bent over backwards to put people in homes they can't afford long-term. The market is now properly weeding them out as you pointed out. I DO have some sympathy for individuals who got into some of these mortgages. Not everyone is as smart as you and I and just believed whatever they were told by mortgage brokers who wanted a sale. Quote Link to comment Share on other sites More sharing options...
Ursa Majoris Posted August 1, 2007 Share Posted August 1, 2007 You are absolutley correct that a no doc individual does not deserve the same terms as a doc b/c of the added risk. BUT you seem to like the fact that the government is regulating this. I think this is VERY bad. The people who caused all of these issues will be weeded out natualy. The uderwriters will go out of business, the brokers will as well, and companies will tighten their standards.......Why in the world does the government need to step in? Ideally you'd be right. The problem is that the brokers fixing these deals weren't going out of business, it was their clients who were being ruined. Along with them, the rest of us have to watch the housing market collapse and lenders have to take the loss, which promptly gets passed along to Joe Public one way or another. All this legislation really does is force income documentation to be produced instead of either applicant or broker plucking a figure out of their rear end. Quote Link to comment Share on other sites More sharing options...
Easy n Dirty Posted August 1, 2007 Share Posted August 1, 2007 However, in their attempt to pay as little taxes as possible (who can blame them)... You mean other than honest taxpayers? Quote Link to comment Share on other sites More sharing options...
Grimm74 Posted August 1, 2007 Share Posted August 1, 2007 You mean other than honest taxpayers? WHAT? He is writing about folks who LEGALLY reduce their tax liability. "Honest" What are you taking about? Quote Link to comment Share on other sites More sharing options...
AtomicCEO Posted August 1, 2007 Share Posted August 1, 2007 WHAT? He is writing about folks who LEGALLY reduce their tax liability. "Honest" What are you taking about? Why so defensive? He didn't call anyone dishonest... yet you jumped up like you had a guilty conscience. Quote Link to comment Share on other sites More sharing options...
Grimm74 Posted August 1, 2007 Share Posted August 1, 2007 Why so defensive? He didn't call anyone dishonest... yet you jumped up like you had a guilty conscience. Yes, he did. He said other then honest tax payers. The others would be dishonest. Who are the othesr to you? Besides the folks on Lost. Quote Link to comment Share on other sites More sharing options...
BiggieFries Posted August 1, 2007 Share Posted August 1, 2007 another one bites the dust A friend of mine in NY is a programmer for American Home Mort. at their headquarters in Melville, NY. He's waiting to see if he still has a job. Quote Link to comment Share on other sites More sharing options...
Ursa Majoris Posted August 1, 2007 Share Posted August 1, 2007 This from the article: The biggest U.S. mortgage lender, Countrywide Financial Corp., said last week late payments rose among some of its most creditworthy clients. Ruh-roh...... Quote Link to comment Share on other sites More sharing options...
alexgaddis Posted August 1, 2007 Author Share Posted August 1, 2007 Ideally you'd be right. The problem is that the brokers fixing these deals weren't going out of business, it was their clients who were being ruined. Along with them, the rest of us have to watch the housing market collapse and lenders have to take the loss, which promptly gets passed along to Joe Public one way or another. All this legislation really does is force income documentation to be produced instead of either applicant or broker plucking a figure out of their rear end. Well, that was the goal...but lenders are getting rid of stated all together which sucks for self-employed people who could prove their income with bank statements or something similar... Quote Link to comment Share on other sites More sharing options...
dmarc117 Posted August 1, 2007 Share Posted August 1, 2007 this problem also stems from stupid people and people that had to have the 'big' house. Quote Link to comment Share on other sites More sharing options...
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