Monday, September 10, 2007 | 11:00 AM

I hadn't heard this acronym before -- NINJA Loan:

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.]

These are also known as default and foreclosure loans.

Example citations via Wordspy:

"It's not as though the absurd excesses of the mortgage market were some big secret. Lenders brazenly advertised "low-doc" and "no-doc" loans that required borrowers to provide little or no documentation of their ability to repay. They pushed "ninja" loans, requiring no income, job or assets. And adjustable rate mortgages that were barely affordable at their teaser rates.
—"Risky-mortgage meltdown was predictable, preventable," USA Today, August 10, 2007

In 2004, when US interest rates were 1 per cent, there were few problems in the sub-prime market. However, since then the Federal Reserve Bank has raised rates 17 times in a row. Defaults on Ninja loans have become common and some sub-prime lenders, such as New Century Financial, have been driven to bankruptcy as a result.
Why is this a problem for homeowners in the UK?

The sub-prime difficulties are affecting the global financial system because these Ninja loans do not just sit on US banks' books. They are sliced up, repackaged and sold on to hedge funds, pension funds and other investors around the world. This is why equity markets have taken such a battering recently."
—Paula Hawkins, "Will we feel the chill?," The Times (London), August 24, 2007

Its not too hard to understand why 70% of the country does not want to bailout either the homeowners, the lenders or the funds that bought this junk.


Note: These loans are not to be confused with the hilarious AskaNinja

Monday, September 10, 2007 | 11:00 AM | Permalink | Comments (42) | TrackBack (0) add to | digg digg this! | technorati add to technorati | email email this post



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The real name of that loan is a NINANE. Some guy in CA thought he had a cooler name for it.

It actually reads no income, no asset, no employment.

It was a great loan for refinances if your credit score was over 700 and the LTV was 65% or less.

The problems occurred when the subprimers adopted the "stated income stated asset") loans with credit scores of 580+ and CLTV to 90%.

All you had to do was have someone verify that you worked for them and presto! You stated you made 35g's a month and stated you had 250k in the bank and you were good to go.

Those companies like Ownit backed by Merryll- which is now First Franklin) are gone, thankfully.

Posted by: Lyon | Sep 10, 2007 11:36:54 AM

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