No-document borrowers may have plenty to hide
Sunday, November 26th, 2006If the IRS wants to spot large numbers of people who are stiffing the tax collectors, it might want to consider auditing a fast-growing segment of the mortgage market.New research suggests that more than 1 out of 6 borrowers who take out limited-documentation or no-documentation mortgages do so in part because they have significant under-the-table income that they do not report on federal tax filings.
Limited documentation and no-documentation mortgages once were used primarily by self-employed professionals, small-business owners and individuals who are heavily dependent on periodic bonuses or commissions. In limited or no-documentation programs, applicants typically state their income and assets to the loan officer but are not required to show detailed proof of that information for the lender’s files.




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