David Porter (I think he is a long lost cousin) Writes an interesting story for you.
I refer to it because it touches on something I have not. Reading it will explain why underwriters ask you for documentation. It explains why some mortgage companies go broke, and why some lending institutions are forced to merge. Click here for this great article. Larry Cragun
Here is a sample:
Dear God: Please don’t make me buy back mortgage loans I sold to Wall Street
Mortgage Blog News - Nearly $2 Trillion dollars of mortgage loans were sold to Wall Street investors as “mortgage backed securities” last year.
Many mortgage companies, particularly “sub-prime” mortgage companies are on their knees praying that they won’t have to buy back a good portion of those loans. When these loans are sold, there are buy back provisions for early default and “underwriting errors”.
With the run up in short term interest rates (most sub-prime mortgage loans are two year adjustable rate loans), the housing boom experiencing a “slow down”, and “stated income” mortgage loans beginning to crack, one begins to wonder who is holding their finger in the dyke. The pressure has got to be enormous by now.
