Written By: Hina Habib

The Mortgage industry standing today is due to nonconforming and BC (bad Credit) lending practiced in the past. There were 3 kinds of lending in practice at that time. One was Conforming loans, FHA loans and Nonconforming.  Now comparing with today’s time we are still offered conforming and FHA loans but non conforming loans are out of the picture, except Jumbo loans where we have non conforming loan amount limit. These jumbo loans programs are offered by the conforming lenders.

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Stated loan programs like, SISA (stated income stated assets), SIVA (stated income verified assets) NINA (no income no asset/no doc) offered mostly by the non-conforming or BC lenders, who are really responsible for the mortgage bubble burst and the situation we have in the mortgage industry today.

Conforming lender mostly offered loans products and guidelines written by Fannie and Freddie.FHA always been the same but none conforming or BC lenders used to offer a lot of different programs for the borrowers with slow and bad credit. This lending practice gave an opportunity to every individual to buy a house, but on the other hand increased the risk for default.

Non Conforming or BC lenders offered their products to the borrower having credit delinquencies in the past. These BC lenders offered different stated programs named as SIVA, SISA, NINA and Option Arms with very minimum document requirements. Their programs were mostly based on the credit scores. With minimum credit score requirement of 620 a borrower could get full doc or stated 95% to 100% financing, with a higher rate if going stated. Borrowers financed their primary houses between the rates like 8% to 11% in some cases. Some of the BC lenders offered stated programs at 580 credit scores.

Stated programs were designed basically for the self employed borrowers but later on with the boom of mortgage industry these stated income programs were offered mostly to salaried individuals. Therefore even though borrower did not qualify with his/her original income, but they still could buy properties with stated income programs.

The reason behind increase demand of these loan products was due to increase number of buyers day by day. Number of buyers was increasing because everyone was thinking of making short cut money, by selling property within a year with profit. This buying selling practice also affected the prices of properties, as the house which was worth for only $100000 sold for $150000.

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This practice was ongoing when another program of option arm was introduced not only by, nonconforming lenders but also conforming lenders. This program was presented to borrowers as a best benefit to them but actually it was designed so buyers can buy expensive houses, above conforming limit, with minimum monthly payment. Most of the buyers were not aware of the fact that this was a negative amortization and was adding a balance to their principal loan amount.
Summarizing the whole situation, I think these programs really damaged everyone financially, morally and mentally. Lot of people lost their money as they put large amount of down payments. Mortgage industry is trying to fix this loss but we still have long way to go. And being a part of this industry I really wish we can fix our mistakes.

About The Author

Hina Habib - As an NAMP® staff writer, Hina Habib has been working as a Loan Processor with mortgage industry for more than 15 years now. Hina is a loan processing instructor for Loan Processor University ( She has ample experience of structuring and processing FHA, VA and Conventional loans. She worked with an established Correspondent Lender/ Mortgage Broker for 13 years. After her promotion as a Senior Loan Processor she trained loan officers and other processors. Currently she is working with a strong and established banking institute as a Mortgage Processor II. She is very well informed with the current on going changes in the mortgage history and can help answer your questions more accurately. If you're interested in becoming a writer for NAMP®, please email us at:


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