Democratic Underground Latest Greatest Lobby Journals Search Options Help Login
Google

SONOMA: Borrowers routinely exaggerated their incomes to afford homes at peak of boom

Printer-friendly format Printer-friendly format
Printer-friendly format Email this thread to a friend
Printer-friendly format Bookmark this thread		 This topic is archived.
Home » Discuss » Archives » General Discussion (1/22-2007 thru 12/14/2010) Donate to DU
 
El Pinko Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Feb-10-08 10:09 PM
Original message
SONOMA: Borrowers routinely exaggerated their incomes to afford homes at peak of boom

http://www.pressdemocrat.com/EarlyEdition/article_view.cfm?recordID=8611&publishdate=02/10/2008


How could so many people afford homes at peak of boom?

By MICHAEL COIT
THE PRESS DEMOCRAT
Sunday, February 10, 2008

Borrowers routinely exaggerated their incomes to obtain thousands of Sonoma County home loans during the housing boom, a major reason foreclosures are now spiraling to unprecedented highs.


In their eagerness to buy a home, many borrowers inflated earnings by 50 percent or more to qualify for loans they could not otherwise afford, according to a Press Democrat analysis of loans made in 2005 and 2006.

When home prices peaked in 2005, the typical home buyer in Sonoma County claimed to earn $120,000 a year on loan documents, according to federal home loan data. But they actually earned about $80,700, according to Census data. The spread grew in 2006, when the typical buyer claimed to earn $132,000; their actual income was about $79,000.

They were enabled by a mortgage industry that was so eager to hand out money - and rake in lucrative commissions - that it issued many loans without requiring borrowers to document earnings.
Printer Friendly | Permalink |  | Top
thepurpose Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Feb-10-08 10:10 PM
Response to Original message
1. The mortage industry had no clue income can be verified? Wow!
Printer Friendly | Permalink |  | Top
 
Fresh_Start Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Feb-10-08 10:13 PM
Response to Reply #1
6. People paid higher rates for no-doc loans
if you wanted the best rate, best terms - you provided documentation of income and assets
Printer Friendly | Permalink |  | Top
 
Gman Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Feb-10-08 10:24 PM
Response to Reply #1
13. Oh, that had more than just a clue alright
the mortgage companies invented the ways to verify income. The problem is, out of greed, they chose not to use those tools they had to verify income.
Printer Friendly | Permalink |  | Top
 
ursi Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Feb-10-08 10:30 PM
Response to Reply #1
15. this was clear fraud
Printer Friendly | Permalink |  | Top
 
havocmom Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Feb-10-08 10:10 PM
Response to Original message
2. Back when there was a loan officer in the family, they actually verified income
It was the industry that got stupid and let people get by with lying if that is what was going on in recent years.

Printer Friendly | Permalink |  | Top
 
ingac70 Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Feb-10-08 10:11 PM
Response to Original message
3. When I bought my house....
Edited on Sun Feb-10-08 10:11 PM by ingac70
I had to bring pay stubs and 3 years worth of tax returns to show I made what I said I did. It is obvious these mortgage companies helped these people fudge.

On edit: I bought my house in '03.
Printer Friendly | Permalink |  | Top
 
IndyOp Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Feb-10-08 10:17 PM
Response to Reply #3
9. Yep, me too - pay stubs, tax returns, bank statements...
And I have a decent salary and a tiny house. The mortgage companies were failing to do due diligence it seems to me.
Printer Friendly | Permalink |  | Top
 
aquart Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Feb-10-08 10:26 PM
Response to Reply #3
14. And now they're trying to blame their victims.
Edited on Sun Feb-10-08 10:28 PM by aquart
on edit: during the NASDAQ bucketshop scandals, traders routinely forged inflated incomes for their clients to justify the extremely risky churning of their accounts. This is no different.
Printer Friendly | Permalink |  | Top
 
FreakinDJ Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Feb-10-08 10:11 PM
Response to Original message
4. As directed to by the mortgage brokers
A long known trick in the car sales was to inflate the borrower's income. It was ignored by the banking industry so long they finally started doing it in home lending
Printer Friendly | Permalink |  | Top
 
BlooInBloo Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Feb-10-08 10:12 PM
Response to Original message
5. Irresponsible lenders lending to irresponsible borrowers...
That is all.
Printer Friendly | Permalink |  | Top
 
Quakerfriend Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Feb-10-08 10:13 PM
Response to Original message
7. Most mortgage Cos require a copy of a W2 as part of the
application.

...Blaming the consumer, as usual.
Printer Friendly | Permalink |  | Top
 
BlooInBloo Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Feb-10-08 10:51 PM
Response to Reply #7
16. Except for alt-a loans.
Printer Friendly | Permalink |  | Top
 
Donnachaidh Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Feb-10-08 10:15 PM
Response to Original message
8. oh yeah right -- Joe Schmo homebuyer has the knowledge to deliberately inflate his income
To get a loan. The Mortgage brokers AND the underwriters were -just- filling out the forms, and had NOTHING to do with the rampant fraud, right? :sarcasm:

It's another chapter of blame the little guy who is going to lose his home. Perhaps we should re-vamp laws and make it so the mortgage brokers who pushed the loans through on questionable information loses the fees earned on bad loans. THAT would stop all the nonsense dead in it's tracks.
Printer Friendly | Permalink |  | Top
 
MadMaddie Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Feb-10-08 10:19 PM
Response to Reply #8
10. This is a direct result of deregulation and absolutely no
oversight of Mortgage practices.

I believe that just like the S & L loan disaster this is the same magnitude and people (Mortgage companies) should be prosecuted.
Printer Friendly | Permalink |  | Top
 
dysfunctional press Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Feb-10-08 10:20 PM
Response to Original message
11. those evil low-income home-wanters hoodwinked those poor innocent mortgage brokers by lying...
i sure hope that the federal government comes in to bail out the those well-meaning brokers who were deceived by those dishonest predatory most likely brown-skinned home-buyers. :eyes:
Printer Friendly | Permalink |  | Top
 
sandnsea Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Feb-10-08 10:24 PM
Response to Reply #11
12. ditto
I was so angry when people were saying that shit around here.
Printer Friendly | Permalink |  | Top
 
DU AdBot (1000+ posts) Click to send private message to this author Click to view this author's profile Click to add this author to your buddy list Click to add this author to your Ignore list Tue Apr 30th 2024, 06:25 AM
Response to Original message
Advertisements [?]
 Top

Home » Discuss » Archives » General Discussion (1/22-2007 thru 12/14/2010) Donate to DU

Powered by DCForum+ Version 1.1 Copyright 1997-2002 DCScripts.com
Software has been extensively modified by the DU administrators

Important Notices: By participating on this discussion board, visitors agree to abide by the rules outlined on our Rules page. Messages posted on the Democratic Underground Discussion Forums are the opinions of the individuals who post them, and do not necessarily represent the opinions of Democratic Underground, LLC.

Home  |  Discussion Forums  |  Journals |  Store  |  Donate

About DU  |  Contact Us  |  Privacy Policy

Got a message for Democratic Underground? Click here to send us a message.

© 2001 - 2011 Democratic Underground, LLC