With a simplified application process, a loan for as little as $500 can be acquired through OWBO's low-doc loan
The cost of mortgage insurance increases with risk: A higher LTV, a lower credit score or an alternative-A or low-doc loan
instead of a loan with full documentation will all result in a somewhat higher cost, but the price is still reasonable when compared with the benefits of homeownership.
Just as mortgage lenders got into trouble with no-doc, low-doc loans
, there is a concern government student loan requirements aren't strict enough.
Indeed, in 1995, just as he was getting into the thick of the spread of low-doc loans
, he founded Headlands Foundation, a nonprofit charity, in order, he said, to do things right.
Figure 4 shows a sharp increase in the share of low-doc loans in post-2004 Alt-A originations.
In both cases, the share of low-doc loans increased over the years, as shown in Figure 6.
Low-doc loans were justified by the expectation that property appreciation would offset the risks.
Relaxed underwriting criteria and low-doc loans reduce the time from loan application to loan closing and enable brokers to generate greater loan volumes.
At the NEMBC in Newport, Steven Cofsky, chief director of examinations, Massachusetts Division of Banks, Boston, said his department is "finding that a lot of fraud and predatory lending is not happening in stated-income or no- or low-doc loans
On the other hand, some low-doc loans
can carry a higher risk of delinquency, default and foreclosure.
Recently, however, both of these agencies have discontinued or curtailed the purchase of no-doc and low-doc loans
area Mortgage Banking Research Group uncovered evidence of this strong demand for low-doc loans