Did Rep. Richardson fraudulently over-state her income?
A big question to ask out of this Richardson specuvestor mess is how far did the Congresswoman push the envelope to qualify for this second, foreclosed home in Sacramento? Did she falsify her income on a loan statement to qualify for the 100% loan that financed the now-defaulted home? Specuvestor Casey Serin is under investigation by the FBI for loan fraud tied to falsifying his income on loan documents after his much-publicized real estate speculating ‘career’ fell apart in the early days of the housing slowdown. Did the Representative do the same to acquire the Sacramento home?
Tanta at Calculated Risk does a back-of-the-envelope calculation of the monthly payment for the second home and comes up with a debt ratio of 33% just for the second home payment. Now add in her primary residence home payment on a 359K mortgage (and let’s give her 10% down and a 2/28 teaser ARM at 4.9% for giggles) along with taxes, insurance and other outstanding liabilities and a roughly estimated housing backend ratio pencils to a shade over 50%. If we toss in some credit card debt, car debt and any other liabilities we’re pushing 55% pretty easily. (With one car payment at $300 and one credit card payment of $159 we’re at 53.5% no problem.)
Since the upper-limit of lending backend ratios was 55% in the heyday we either have a Congresswoman who has a penchant for mortgage debt and no other, or we have someone who inflated their income to qualify for favorable loan terms on the second property.
We deserve an (honest) answer.
And if she did overstate her income to recklessly speculate on a property purchase that resulted in a $200,000 loss for her lender she should be prosecuted accordingly and removed from her elected seat.