No Document Mortgage Yes It Once Exist

It wasn't all that many years ago that anybody could walk into a bank, sign a few papers and receive a mortgage. As a result of mortgages being given out this way, the economy soon fell into what is now known as the credit crunch of 2007. These loans continue to be called subprime mortgage loans and unfortunately, they have caused a lot of difficulties for people who received them. As a result of ballooning interest rates and other difficulties, people fell behind on their mortgages and the foreclosure rates shot up considerably. Another type of subprime lending that occurred at that time is known as a no doc mortgage. What is this type of mortgage?

A no doc mortgage is basically a type of mortgage that would be passed through and approved, even though no documentation was provided as far as an individual's income is concerned. Often times, these types of mortgages were provided, solely based on an individual's credit score and their seeming ability to be able to repay the loan. These were freely given to many people and offered them the opportunity to be able to get into a home, even though their income may have been rather low. For some people, it was a good opportunity that they are still benefiting from.

An example of somebody who would receive a no doc mortgage are individuals who are self-employed. Many people who own their own business do not necessarily show a large profit whenever they fill out their taxes. It is not that they are cheating on their taxes, it is just that they are using a little bit of creativity whenever they crunch the numbers. Perhaps they write off absolutely everything that is possible and as a result, they show little or no income for the year. Although these individuals could afford to repay the loan, they could not qualify for a conventional loan because of their tax returns.

Unfortunately, especially for those of you who have the income but do not show it, there are very few places where you can receive a no doc mortgage. Most lending institutions have really been stung by the current downturn in the economy and are unwilling to stick their neck out in this regard. As a result, you may need to look to other forms of financing in order to get into a home at this time.