Monday, May 5, 2008

How the mortgage industry nurtured deceit (in America)

Inside the Liar's Loan

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.

Posted by drewster @ 07:46 PM (1074 views)
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One thought on “How the mortgage industry nurtured deceit (in America)

  • bidin'matime says:

    Do you recall the documentary several years ago, showing that something like 9 out of 10 sampled brokers / lenders in a town centre (somewhere in London?) tried to persuade the enquirer to overstate their income? I thought that would be the start of the collapse, but the practice went on for years after that. I know plenty of people who have borrowed ratios (to true income) well into double figures. In the UK it’s called ‘self-cert’, but Liar Loan about sums it up.

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