Lenders of stated income loans are at the risk of a high rate of default. These lenders loans usually attach a high-interest rate and high repayment to the loan because they acknowledge they are taking a high risk with such loans. So the higher the loan risk the higher that interest and repayment.
However, as mentioned before, the stated income loan is prone to fraud and in fact, a lot of misuse of the loan has been recorded. In 2010 a law was enacted to this end so as to minimize the spread of the stated income loan. The law mandated lenders to verify the income of the borrower and also the means by which the loan is to be repaid. Even with is law in place, some small financial institutions still offer the stated income loan. Also, some individuals do offer the stated income loan and usually allow the borrower to have the fund under more relaxed conditions.