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No Pay Stub? No Problem. Unconventional Mortgages Make a Comeback

Unconventional mortgages are becoming more popular once again. For some people with unconventional jobs it can be difficult to verify employment by pay stubs or tax returns. Some mortgage companies are creating mortgage products that will still allow these people to verify. Sometimes they are verifying income via bank statements. Although these loans seem similar to the “liar loans” of before the meltdown, they are different in key ways. The banks are still verifying the income of the client in this case.

Key Takeaways:

  • When Aryanna Hering was applying for a loan, she didn’t have pay stubs or tax forms to document her income but her mortgage accepted her bank statement.
  • According to Inside Mortgage Finance, lenders gave borrowers about $34 billion worth of unconventional mortgages during the first three quarters of 2018.
  • During the financial crisis, loans nicknamed “liar loans”, which are loans where borrowers misstate their income and no documentation was being asked by lenders, soared.

“These loans, aimed at buyers with unusual circumstances such as those who can’t provide the standard proofs of income, are growing rapidly even as rising interest rates and higher home prices crimp demand for mortgages.”

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