Monday, May 5, 2008
How the mortgage industry nurtured deceit (in America)
The term "Liar Loan" is mortgage-industry slang for what's more formally called a "stated income" mortgage — a mortgage that a lender gives without checking tax returns, employment history, or pretty much anything else. Many of the loans that are in trouble now, or will be in trouble soon, fall into this category. But the term gives only the barest hint of the pervasive failure involved. Americans lying on mortage applications became as common and as normal as Italians or Russians lying on tax returns. This was a systemic failure of the norms of society.