Beware of the BBB logo and use

As a marketing guy I notice the little things that arouse suspicion in advertising and I am keenly aware of the tricks shady mortgage companies use to establish credibility. The biggest red flag is the blatant use of the Better Business Bureau logo and name ads. The more prominent it is in the ad, the bigger your suspicion should be of the advertiser. The fact is, the BBB is a toothless tiger. They blow a lot of hot air and have little effect on how business is conducted today. Businesses that use them are trying to establish a credible reputation based on the outdated preception many people have. If the BBB logo is in every ad or is part of their TV/radio ads...run the other way! The BBB can not help you recover lost fees or payments. All they do is send a letter requesting the business address the issue and have no legal or contractual power to force anyone to do anything.
EVERY mortgage company that I have come in contact with that features the BBB in their advertising has proven to be less than reputable and some are outright criminals! It is better to check with your state's Secretary of State office and the local mortgage banking association. Or you can go the traditional way and work first with your local bank. Rates vary little between banks and mortgage brokers. The advantage brokers offer over banks is often a wider range of mortgage options and companies. But you need to be cautious with fees.

Stated Income loans and the lies about them

Recently received an email (spam actually) about a new method of dealing with "Liar" loans. It put all stated loans into the same basket and implied that stated loans where basically all lies to get qualified. This is the kind of simple minded view that most outside observers have including clueless lawmakers. For the record, STATED loans were designed for self employed people who have trouble showing their income. They take deductions and expenses that most others do not have. You cannot look at pay stubs, W2's or tax returns and get a good picture of the income. As an underwriter you would look at the type of job the person did, what others in the same field get for compensation, what the bank records look like for a income flow monthly and what the tax returns showed for deductions. Then the underwriter would determine if the stated amount is reasonable.
Going back the email that referred to "Liar" loans, it seems to try to take advantage of this confusion between traditional stated loans and the moronic loans offered by the Sub-prime at the peak of it's short-lived life. People who are (or were) w2'ed income were often placed with the sub-prime stated income loans to qualify for a higher mortgage amount. There were grocery cashiers making $70,000 on paper! The normal income and debt ratios are there for a reason. If you are over that ratio, you cannot afford the higher loan amount-period. This conforming type of stated loan worked within expected default rates for many years. With a w2'ed borrower you know exactly how much they make. Self-employed people are not so easy to pin down. Thus you need stated income loans for these people using common sense indicators. The reason everyone is referring to stated income loans as liar loans is the misconception between the stupid loans offered by sub-prime and conventional lenders. States have gotten involved with new regulations and laws to make conventional stated loans impossible to get. Again, what I have said before about the mortgage industry, Fannie/Freddy and congress is that they are punishing the wrong people. Conventional stated income loans were not the problem or even a blip on the industry crisis. The problem was with the sub-prime stated income loans sold to unqualified borrowers with ARMs to add insult to injury. Wake up mortgage people...the problem is solved. There is no more sub-prime industry and the borrowers that took these loans are in foreclosure or heading that way soon. Now go back to where conventional guidelines worked (about 4 years ago or so) and give both full doc and stated borrowers what they deserve-a chance. If we are going to get out of this housing depression you need to make loans. With the strangled guidelines applied now, over 80% of qualified people are being shut out.