Mortgage Offers Relief to Secretive Borrowers

One of the many mortgage options available today is a limited or no documentation loan, which allows a borrower to “tell” the lender how much they make without having to show proof. This was an option that was created for small business owners or commissioned-based homeowners that had fluctuating income as a result of their profession. More and more, however, this mortgage option is being used for people that do not claim all their income on their tax returns, such as those that have second jobs while being paid in cash.

Almost 50% of the current mortgage market, and new mortgage applications, are being completed under alternative documentation. Both home purchases and refinances are contributing to the growing number of mortgages completed with little income documentation; it is estimated that one out of every five applications with limited documentation grossly overstate the borrowers income. New laws and guidelines are being recommended to the mortgage industry in order to curb this growing number of “illegal” mortgages, although 2006 reports show that this mortgage option is still on the rise.\r\n