3 years too late.
The company also will limit the use of low-documentation products in combination with these loans. For example, the company will no longer purchase “No Income, No Asset” documentation loans and will limit “Stated Income, Stated Assets” products to borrowers whose incomes derive from hard-to-verify sources, such as the self-employed and those in the “cash economy.” There will be a reasonableness standard for stated incomes.
Notice that Freddie Mac buried the lede (above) in the middle of a middle paragraph of their press release. Their previous policy was too stupid for words so they buried the change.
Why would a salaried person ever get a “stated income” or “no doc” loan when the rates are higher on those loans? This blog explains it.
There is typically only one reason why a borrower who works at a job and has paystubs and w-2’s uses a “stated income” loan. That reason is because they cannot qualify for the mortgage loan because their income to debt ratios calculations are too high…