Liar Loan

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 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.

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.

Low-documentation mortgages usually fall into the Alt-A category of mortgage lending. Alt-A lending depends heavily on a borrower's credit score (FICO score) and the mortgage's loan-to-value ratio (LTV) as tools to determine the borrower's ability to repay the mortgage.


Investment dictionary. . 2012.

Игры ⚽ Поможем решить контрольную работу

Look at other dictionaries:

  • liar loan — n. 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 …   New words

  • 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} …  

  • 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

  • butler lie — n. A lie used to politely avoid or end an email, instant messaging, or telephone conversation. Example Citations: Yet technology is already laying siege to the butler lie. Services like BlackBerry Messenger enable mutual users to track when their …   New words

  • microcredit — (MY.croh.cred.it) n. A loan program that offers small, short term loans to help people become self employed. Also: micro credit, micro credit. Example Citation: Microcredit got its start in Bangladesh in 1976, when Muhammad Yunus, an economics… …   New words

  • 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

Share the article and excerpts

Direct link
… Do a right-click on the link above
and select “Copy Link”