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Boston is facing a rash of foreclosures and one of the leading culprits is the use of Liars Loans. These stated income loans never checked income for the borrowers and very often the incomes were grossly inflated by the borrowers.

Now that housing prices have stabilized or are decreasing and the borrowers can not refinance or borrow anymore, the foreclosure  rate is skyrocketing.  With the combination of these liar loans and people who were financing their lifestyle through their housing appreciation, the Boston metro area is in for a rough period.

That industry helped make homeownership possible for people who might not have been able to buy in the past. But it also fueled the growth of “stated income” loans requiring no W2 or other proof of income..  Those mortgages have become so frequently abused in Boston and across the country that they are now often referred to as “liar loans.” Under such deals, the income of low-income borrowers is often grossly inflated, qualifying a buyer for an expensive home or condo that in reality they could not afford.

Jamaica Plain nonprofit Ensuring Stability through Action in our Community (EASC) estimates as many as 120 home buyers facing foreclosure, which the agency has worked for over the last year, had mortgage deals that involved “liar loans.”

Most of them simply don’t have the income to pay these loans, even with assistance. “We see a lot of money coming out of communities sucked out by these fraudulent mortgages,” said Robert Pulster, ESAC’s executive director. via the BostonHerald.com.

Related posts:

1. Bank of America To Modify 630,000 Loans in 2009 To Avoid Foreclosures
2. FHA Creating Next Housing Bust? 1 in 8 FHA Loans is Delinquent
3. South Carolina Blocks Foreclosures Until Housing Plan Enacted
4. Boston’s Iconic Hancock Tower Is Losing Tenants In Downturn
5. What is In The Homeowner Affordability and Stability Plan