liar loan

A loan or mortgage provided without requiring documentation from the borrower.
Example Citations:
Last year almost forty per cent of subprime borrowers were able to get "liar loans"—mortgages that borrowers can get simply by stating their income, which the lender does not verify. These loans were ideal for speculative gambles: you could buy far more house than your income justified, and, if you could flip it quickly, you could reap outsized profits. Flat-out fraud also proliferated: consider the mortgage taken out by one "M. Mouse."
—James Surowiecki, "Subprime Homesick Blues," The New Yorker, April 9, 2007
The housing boom brought another change. Mortgages are no longer held for long by banks but are packaged together as massive bonds and sold on Wall Street. Propelled in part by demand for these bonds, companies began offering loans that required little or no documentation of borrowers' income.
These "stated income" loans were designed for a limited purpose: giving self-employed people a crack at homeownership. But during the boom, the number of such loans exploded to the point that they became a running joke in the industry, earning the nickname "liar loans." Estimates vary widely, but research suggests that they made up a significant portion of all mortgages during the boom — 58 percent in a study by First American LoanPerformance.
—David Cho, "Housing Boom Tied To Sham Mortgages," The Washington Post, April 10, 2007
Earliest Citation:
Mortgage consultant D. James Croft, the former chief of examinations and supervision at the Federal Home Loan Bank Board, says borrower misrepresentation — the little-white-lie level of fraud — is "pervasive" in some portfolios, particularly those with significant concentrations of low-documentation mortgages originated in the past several years. "Low doc" loans, popularized by industry giants including Citicorp Mortgage Inc., allow borrowers to submit minimal verifications on earnings, debts and employment status. Some lenders aggressively marketed even "no-doc" loans, where borrowers submitted no proof of income whatsoever at application. If the loan amount required an annual household income of $100,000, in other words, a $50,000-per-year earner could simply tell the originating mortgage broker that he qualified. No W-2s or tax returns were necessary, hence their sobriquet in the industry — "liar loans."
—Kenneth R. Harney, "Lenders Battle Mortgage Scams," Barron's, April 13, 1992
Some synonyms for liar loan are no-documentation (or no-doc) loan and stated income loan.
Related Words: Categories:

New words. 2013.

Look at other dictionaries:

  • Liar Loan — A category of mortgages known as low documentation or no documentation mortgages that have been abused to the point where the loans are sometimes referred to as liar loans. On certain low documentation loan programs, such as stated income/stated… …   Investment dictionary

  • liar loan — /ˈlaɪə loʊn/ (say luyuh lohn) noun Colloquial → no doc loan. {so called because of the ease with which details, especially regarding income, can be falsified by the applicant} …   Australian English dictionary

  • Liar's Poker — This article is about the book. For the bar game, see Liar s poker. Liar s Poker   …   Wikipedia

  • liar's mortgage — noun A derogatory term for a stated income (U.S.) or self certificated (U.K.) loan secured by a mortgage granted without the lender verifying information provided by the applicant as to his or her financial or employment status …   Wiktionary

  • Stated income loan — A stated income loan is a mortgage where the lender does not verify the borrower s income, by looking at their pay stubs, W 2 forms, income tax returns, or other records. Instead, borrowers are simply asked to state their income, and taken at… …   Wikipedia

  • ninja loan — n. A loan or mortgage given to a person who has no income, no job, and no assets. Also: NINJA loan. [From the phrase, No Income, No Job or Assets.] Example Citations: It s not as though the absurd excesses of the mortgage market were some big… …   New words

  • United States housing bubble — The United States housing bubble is an economic bubble in many parts of the United States housing market including areas of California, Florida, New York, Michigan, the Northeast Corridor, and the Southwest markets. On a national level, housing… …   Wikipedia

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  • mortgage mill — n. A company that automatically approves mortgages, particularly to unqualified buyers. Example Citations: During the housing boom, lenders created mortgage mills and put people into overpriced homes with mortgages that were difficult to… …   New words

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