The U.S. has again begun issuing mortgages that have not been confirmed by income, which led to the 2008 crisis.

In the US, they are again starting to issue mortgage loans to people who cannot provide standard proof of their income. Such loans are issued more and more, despite the fact that rising interest rates and rising house prices limit the demand for mortgages. Ten years ago, this led to a housing market crash.

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Arianna Hering didn't have receipts or tax returns to document her income—so she found a company that agreed to take 12 months of customer letters and 610 months of bank statements from a part-time nursing student to support a $XNUMX mortgage, she writes. Wall Street Journal. And Hering is not alone in her decision.

In the first three quarters of 2018, US lenders allocated 34 a billion dollars to such non-standard mortgages, which is 24% more than in the same period a year earlier, according to research group Inside Mortgage Finance. Although this is less than 3% of 1,3 trillions of dollars of all mortgage loans, the upward trend is felt, since at the same time there was a decline in traditional home loans by 1,2%.

During the financial crisis, many non-standard loans “stuck”: borrowers lowered their income, and lenders did not require documentation. Today, industry leaders say that the new mortgage, now called “unqualified,” has gone through a number of changes since the 2008 crisis of the year and has become much safer.

Despite this, some regulators and consumer advocates are concerned that the growth of this type of mortgage and competition for the issuance of such loans may lead to renewed risks for the housing market.

"It's a slippery slope," says Mat Ishbia, president and CEO of United Wholesale Mortgage, a large nonbank lender that doesn't make such loans.

Until now, non-standard loans were mainly issued by specialized mortgage companies. But traditional lenders are increasingly turning to problem borrowers and helping to stimulate the growth of "unqualified" loans. According to Inside Mortgage Finance, about half of the lenders surveyed said they plan to do this business.

These mortgages do not meet the criteria supported by Fannie Mae or Freddie Mac. Some of them are significant in relation to the borrower's income, cover more than 30 years, or are based only on interest payments. In other cases, borrowers have problems with their credit history. Many cannot document their income using payment receipts because they are self-employed or are retired.

Tom Jessop, a loan advisor at New American Funding, who worked on the Hering loan, said that over the past year and a half, demand for non-standard loans had doubled, and now they make up more than a third of his business.

“I think it's just a boost for an audience that has been neglected for years,” Jessop said. “Now they have the opportunity to finally get funding.”

At the same time, investors from Wall Street are buying unconventional mortgage loans in bonds, returning to a more risky, but also more profitable market niche. In 2018, such mortgage-backed securities were sold for 12,3 billion, which is almost four times more than a year earlier, according to the rating agency DBRS Inc.

DBRS says that these transactions are almost without loss, although the tension of borrowers may increase in case of deterioration of the economy. Credit rating firms claim that there are key differences between old loans and new loans: new loans comply with the post-crisis ability to repay rules, which require lenders to determine that their borrowers can pay off their debts. However, some are concerned about the risks to borrowers.

“Things are definitely starting to fluctuate,” said Guy Cecala, chief executive of Inside Mortgage Finance. “As more companies enter the market, competition will increase and underwriting (the guarantee of being paid in the event of a financial loss) will weaken.”

In many non-standard loans, borrowers use bank statements that show that a person makes money, as Hering did. There are other ways to prove that debt can be repaid: one type of non-traditional mortgage, called a loan with a depletion of assets, involves dividing the total assets of the borrower by the term of the loan to obtain a reserve figure of monthly income.

“Some banks began this practice without adequate risk management controls,” the Office of the Comptroller of the Currency report said.

Hering's 30-year-old received a loan at a rate of just over 6% for the first five years, with subsequent adjustments. She used the money to buy her grandfather's house in San Clemente, California. The woman inherited it along with other relatives, and she needed a loan to pay for their shares.

“It was very scary: If it didn't work out, I would have to give up the house, but I was determined to keep it,” said Hering, who is renting out rooms in the house to pay off her mortgage.

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