Wednesday Morning: That’s Why They’re Called ‘Liar Loans’

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News item: A quick check of stated income loans found that more than half the applicants overstated their income by more than 50%, according to the Mortgage Asset Research Institute. Yes, that’s why they’re called ‘liar loans.’

You’ll find that and other troubling stuff here, in Reuters’ revealing look at the rise of mortgage brokers. In one passage that should be taped to the refrigerator door of most homebuyers, Reuters observes: ‘Many consumers assumed that brokers were required to offer them the best possible deal. But generally they are not required by law to act in a consumer’s best interest, and their own profits rise when they sell higher-interest loans that cost consumers more.’

Remember that: the worse the loan is for the consumer, the more money the mortgage broker makes. We’re not saying most brokers take advantage of that; we’re just saying it’s true.

Comments are always welcome.
Photo Credit: Reuters