Just wondered why some lenders are more than happy to take a Stat Dec for income with no questions asked in their new Low Doc products but won’t take security over (very secure) commercial asset or property??? Seems like their priorities are a little screwed up.
That doesn’t make sense at all. Unless they think the threat of jail is more of a deterrent than a mere repo! I didn’t actually know that product existed. What sort of L/V is required on stat dec income loans? What evidence do they require?
Edited by – [email protected] on 26/05/2002 08:40:17 AM
I have recently completed an advisor training course with a securitised lender who writes these types of loans. They have 2 programs in this area called ‘Low doc biz'(self-employed or F/T investors for at least 2 years) and ‘Low doc asset'(self-employed or F/T investors – no time limit – so your 1st investment property would qualify).To qualify the loan needs to be primarily for business or investment, ie over 50%.
The maximum LVR on the ‘biz’ is 75% and on the asset is 65%. Documents required on the ‘biz’ include asset/liability state’t, ‘stated’ income (proof not req’d) and loan purpose checklist and declaration. ‘No’ asset/liability/income documents are req’d on the ‘asset’ program other than a loan purpose checklist and declaration.
Obviously some other documents, such as valuation and credit reports are req’d to complete an application. I would be happy to provide full details to anyone interested in more information.
‘Commercial’ properties are excluded from the programs as I understand because of their volatile demand/value.
Picking up on Mark’s comment about commercial property being viewed as higher risk because of its specialised nature:
Low doc/No doc loans are now available up to 90% of the properties value (the non conforming version) or 76% on Mortgage Insured Products (most of the market). These are predominantly written by lenders who don’t have commercial divisions – thus the first impediment to commercial security. The second reason, in view of the Low doc LVRs is that the maximum standard LVR on commercial security is 70% (compared with 95 – 110% on prime residential). This is because of the greater risk involved with commercial property from a mortgagee sale point of view.
That said the non conforming sector of the Australian market is growing exponentially. It wouldn’t be a surprise to see Low docs written on other than standard residential security in the not so distant future.
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