Are Stated Income Loans Illegal in Nevada?

NO!A Letter From Our Mortgage Lending Division Commissioner
by Aaron Gordon

I have gotten a lot of calls in the last few weeks from very nervous real estate agents who have asked me if stated income loans will become illegal in Nevada as of October 1, 2007 when the new Nevada Lending Law goes into effect.

Others have told them that they will be illegal and they are panicked.

These agents are wondering if they need to start looking for other careers as stated income loans are so prevalent in our city due to the number of "tipped" employees we have.

The answer in "NO!" Stated income loans are not illegal and will not become illegal when Assembly Bill 440 (Nevada Lending Law) goes into effect on October 1, 2007.

In a letter dated, Thursday September 13, 2007 to all Mortgage Banker and Broker Licensees from Joseph L. Waltuch, Commissioner of the Mortgage Lending Division in Nevada, he confirmed this.

Here are some parts of his letter.

=================================================================

EXCERPTS FROM THE LETTER FROM COMMISSIONER WALTUCH:

The Mortgage Lending Division (the "Division") has become aware that there exists some confusion amongst licensees regarding certain amendatory language to the new Nevada Lending Law.

Effective October 1, 2007 it will be an unfair lending practice for a lender to:

"(b) Knowingly or intentionally make a home loan, other than a reverse mortgage, to a borrower, including, without limitation, a low-document home loan, no-document home loan or stated-document home loan, without determining, using any commercially reasonable means or mechanism, that the borrower has the ability to repay the home loan."

Many licensees have expressed concern as to the meaning of "commercially reasonable means or mechanism" in the context of determining that the borrower has the ability to repay the home loan.

This does not prohibit specific mortgage products or types of documentation that may be utilized in the making or underwriting of home loans.

Read Full Article