I spoke to a listing agent a few days ago who was looking for a non-Hard Money Stated Income loan program for the prospective buyer in Escrow to his listing, of which he's also the seller. The buyers had a Stated Income loan approved with East West Bank in Southern California, but East West had cut the appraisal by 20%, even though the buyers already had two appraisals supporting a much higher value.
This is the conundrum of dealing with the only bank that I've found that still offers Stated Income loans. It's either, "We'll go Stated and cut value by 20% or you the borrower document your income and we'll go with the value on both appraisals."
In the past couple years, I've spoken to Loan Officers at East West in Los Angeles and Seattle to get more info on the program for clients of mine. They said the bank would, "lend up to 60% LTV on the Stated program but will almost always cut the appraisal by 10-25%."
So what's the alternative?
- Add additional borrowers to the loan application who can meet the income requirements.
- Pay cash.
- Take out a private money or hard money loan.
Private money loans aren't always the most desired option, especially for people with 780 FICO scores accustomed to getting the very best in rates and fees, but they sometimes are the only remaining option in this extremely tight mortgage credit market that lacking Stated Income loan programs.
The most competitive private money lenders start at 5.99% with 3-4 points cost and usually won't go higher than 60-65% LTV. Technically they are Stated Income loans that are more concerned about the quality of the property and the equity position, but they still like to see that the borrower can service the debt.