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NINJA Loans

Analyzer

Contributor
Aug 31, 2007
244
71
Portugal, Europe
I had never heard the expression before today. Do you guys know what it stands for?

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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.]
ninja.gif



Some citations:

"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
 
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