Nearly ten years after the housing crisis, banks are getting ready to offer what they call fewer doc loans, which is just a stepping stone to the no doc loan. As we stated before banks need to put money into the hands of the masses so they can fuel the next bubble. A bubble needs mass participation and banks thrive of bubbles. Every bubble and bust cycle is created and masterminded by banks. Banks never lose, they just pretend to, because they know they will be bailed out. The Fed is a private institute run and owned by the banks, so they have nothing to worry about.
“Lite Doc.” That is what Quontic Bank, an FDIC-insured community lender in New York City is calling its product. It requires only verification of employment and two months worth of bank statements. For self-employed borrowers, it requires documentation of one year of profit and losses. The Lite Doc loans are five-year adjustable-rate mortgages with interest rates in the low- to mid-5 percent range, according to the bank. Thirty-year fixed-rate loans, which when fully documented can offer rates in the high-3 percent range, are not part of the offering.
Most loan applications today require two years of 1040 income tax statements, two years of employment W2s and at least four pay stubs, in addition to bank statements and credit checks. The Quontic loan does not have to comply with strict new “ability-to-repay,” or ATR, rules established in the wake of the financial crisis under Dodd-Frank legislation, due to a little loophole: Quontic is designated as a community development financial institution, or CDFI, under a small U.S. Treasury program which funds economic revitalization in low-income communities. Full Story
This company has taken things one step further, using a loophole in the law they can lend money without having to ask for tax returns or other documentation that traditional lenders would require. Again this is all taking place before any modification has been made to Dodd-Frank. Banks need bubbles to make killings, so you need to understand that there will always be a bubble because these guys need them. They will find the way to set the foundation for the next bubble event.
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