I want to address an issue I mentioned yesterday which generated a lot of reader mail. I wrote: “You can’t do a stated income loan anymore, and you can’t do 100 percent financing.” I was actually quoting a mortgage expert I had spoken with earlier who was trying to make the point that despite the Fed rate cut, lending standards today are far tighter than they were just six months ago.

Many of you wrote in, some of you very upset, saying that you can get 100 percent financing and you can get stated income loans. I asked Jay Brinkmann, VP of economics at the Mortgage Bankers Association to clarify:

From everything that we've heard that's out there is that people have pulled way back on stated income if it's combined with any kind of LTV (loan to value). If it's going to be high LTV it's got to be fully documented, whereas the stated income tends to be where it's a very large down payment, wealthy individuals, maybe a streamline refinance, there's still some of that going on.

Where we've seen some of these ads that are still out on the Internet, it tends to be lead aggregators where they're trying to get somebody's name. They're not necessarily lenders offering terms, but they're trying to get people to contact them, give them their name and contact so they can sell the contact to a broker or somebody else to see what they truly would qualify for, so it's a come on.

As for 100 percent financing:

I think it's going to be hard to get. In a big market there are probably some out there but I think it's very very rare.

I spoke to another broker in Maryland this morning. He says there is still some 100 percent financing, but the credit has to be perfect, it can’t be in a market that’s seeing huge price drops, and the interest rate is going to be higher. He also said it’s rare.

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