Real Estate Community Forum

I recently heard that people who have "liar loans" are defaulting in record number. In some parts of the country, these "liar loans" are threatening to drag out the mortgage crisis for another two years or more. Can anyone please explain to me what are "liar loans" and how do they affect the housing crises that we are experiencing today?

"Liar loans" refers to mortgages that were approved without requiring proof of the borrower's income or assets. You may have also heard the term "ninja loans," which is short for "no income, no job, and no assets."

One of the main reasons why Liar loans are contributing to the mortgage crises is because people who were approved are now unable to refinance their loan. The reason why is because many housing prices have nose-dived, and lenders are now demanding full documentation of income and assets. This explains why so many houses end up in foreclosure.

Liar loans are mortgages approved without requiring proof of the borrower's income or assets. It is also known as low-documentation or no-documentation mortgages.
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Peter

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. These loan programs are designed for borrowers who have a hard time producing income and asset verifying documents, such as prior tax returns, or who have untraditional sources of income, such as tips, or a personal business. These loans are called liar loans because the SISA or NINA features open the door for abuse when borrowers or their mortgage brokers or loan officers overstate income and/or assets in order to qualify the borrower for a larger mortgage.

Mortgages approved without requiring proof of the borrower's income or assets are called Liar Loans. Recently Liar Loans have resulted in a lot of foreclosures putting the crippling economy and the already worst affected Real Estate market in grave situation.

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 asset (SISA) loans, income and assets are simply stated on the loan application. On other loan programs, such as no income/no asset (NINA) loans, no income and assets are given on the loan application form. These loan programs open the door for unethical behavior by unscrupulous borrowers and lenders.