Lending Changes: Stated Income Documentation Comes to Commercial

This meant that the borrower had to show up with a A Course In Miracles of paperwork including personal tax returns, business tax returns, and financial statements in addition to the documents related to the property such as the leases, rent roll, and income and expense history.And in the end, the lender would underwrite the loan based entirely on the property’s cash flow, ignoring the borrower’s income, anyway!

These new lenders are willing to take into account the borrower’s free cash flow on a stated basis, and make their underwriting decision using the borrower’s credit score, the property’s cash flow, and the borrower’s reserve liquidity.This is unprecedented in commercial lending and will most likely force conventional lenders to come up with competing programs in the near future or they will lose too much loan volume.

Another consideration is that the investors who buy these loans will most likely increase their loan amounts in the future if they have a good experience with the smaller loans.

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