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Put away the champagne folks - the conforming loan limit increase seems to be in jeopardy.
According to Inman News:
But an increase in the conforming loan limit faces opposition in the Senate, where Sen. Richard Shelby, R-Ala., is sticking with the position previously held by the Bush administration: that any increase in the conforming loan limit should be tied to strengthening oversight of Fannie and Freddie (”the GSEs,” or government-sponsored entities).
A spokesman for Shelby, the ranking Republican on the Senate Banking Committee, said he “believes that consideration of raising the conforming loan limit should be done carefully within the context of broader and meaningful GSE reform.”
In Shelby’s judgment, “doing so in the absence of such a process enables thinly capitalized entities with recent accounting problems to provide a high-risk benefit to the wealthiest Americans without any real consideration of the need to do so or of the risks it presents to the taxpayer,” a spokesman for the senator, Jonathan Graffeo, told Inman News in an e-mail.
I’ll go out on a limb and say that any stimulus package without some shot in the arm to the GSE’s is going to fall terribly flat. After all, how many mortgage payments can you make with an extra $300?
Stated income fraud is too easy with conforming loans that use the automated underwriting computer programs.
Most people now know what a stated income loan is, and how they were used to fraudulently inflate income on loan applications. What most people outside of the industry do not know is that many of Fannie Mae’s loans are stated income but they call them full doc?!? How can that be…. that just does not make sense, right? Brokers and Bankers for the past few years are usually forced to “import” the loan application into a computer program to underwrite the loan (called desktop underwriter/ originator or DO/DU). Through trial and error over the years (and with help of bank employees) brokers and bankers have learned to “massage” the application so that the response we get from the computer program will not require income documentation (this makes a stated income loan, but with interest rates the same as full doc, so they call it full doc)
At first when I know you could have submitted the loan around a dozen times before being “locked out”… I dont know how many times you can re upload now, but most processors know what will fly, and what will not
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