This post originally appeared on the Bronte Capital blog, run by Sydney fund manager John Hempton. More details below.
These advertisements are pitched at mortgage brokers and they have lots of jargon. But this advert is priceless…
It says “Professional fighter wants to buy an estate with a mixed martial arts studio and needs an asset depletion income qualification loan. BOFI Federal Bank can do that.”
So what is an “asset depletion loan”?
Here is a fairly standard explanation from a the Chicago Tribune:
Asset depletion. Some high-net-worth borrowers don’t show enough adjusted gross income on their tax returns to qualify. With an asset depletion loan, the lender factors the borrower’s liquid assets into the income calculation. The asset amount, less the down payment, is amortized over 30 years or until the borrower reaches age 85, whichever comes first, just as if the money were spent during that time.
So the fighter here does not have enough verified income to qualify – and in this context BOFI are happy to impute an income to the forthcoming mixed martial arts studio.
Good luck with that. I am not sure how good the secondary market is in failed mixed martial arts studios.
This post originally appeared at Bronte Capital. Republished with permission.
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