Finance
A 'stated income' or 'no-doc' mortgage is considered predatory in Pennsylvania because:
ASuch loans always have fixed rates only
BThey allow borrowers to qualify for loans based on unverified income, leading to borrower overextension and default✓ Correct
CThey are prohibited by PHFA
DThey require larger down payments than conventional loans
Explanation
Stated income loans allowed borrowers to qualify based on claimed income without documentation, facilitating mortgage fraud and enabling borrowers to take on loans they couldn't afford. These toxic products were major contributors to the 2008 housing crisis. Post-Dodd-Frank regulations require lenders to verify ability to repay.
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