Here is a recent question that keeps coming up to one of our savvy local lenders and 
his response:
Client : “Do you think that stated income loans will ever make a comeback?”
Scott the lender: “The existence of stated income programs as well as other “exotic” products was a key contributor to the real estate boom. These products were also the key contributor to the fiscal crisis and economic pain we have felt. There is no doubt that the credit pendulum has moved too far in the other direction, but I do understand why it has happened. Right now, a home loan is not a safe investment for a purchaser. It will not become a safe investment until real estate stabilizes. When real estate does stabilize, the loans which are secured by real estate will be more stable and the pendulum will start to swing back. But not to where it was. You will not see “no-money down, low credit score, stated loans” in my opinion. If we see stated, and that is a BIG IF, it is likely to be for those who have a low LTV, a great score and are willing to pay a high rate premium as these loans may have to be kept in portfolios and will be subject to regulation under the Dodd Frank Act. For example, ability to repay may mean that they have cash in reserve at least equal to the loan size. The real estate markets will recover. The pendulum will swing back. But how far, will remain to be seen.”
I think he is right on the money.
