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.
Now the banks are trying to foreclose on these ‘low or no documentation loans’, yet judges are increasingly telling the banks their documentation is not sufficient to take possession.
The lack of documentation means that for literally millions of US residential mortgages, nobody can prove who actually owns the property – not the banks and not the defaulting buyers.
The consequence for years to come is that millions of properties nationwide will remain unsellable because of the massive cloud that hangs over all of their titles (would you buy a house if you couldn’t prove the person selling it was actually the owner?).
For the moment, Congress appears to be studiously ignoring this massive and growing title problem. Yet until this issue is resolved, the US housing market can never stabilize, and we are left instead with degrading and still overpriced housing stock that is no use to anyone except the defaulted borrowers who essentially become permanent squatters in their own homes.
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Goldman Sachs and Magnetar before they do any more damage…
Now the banks are trying to foreclose on these ‘low or no documentation loans’, yet judges are increasingly telling the banks their documentation is not sufficient to take possession.
The lack of documentation means that for literally millions of US residential mortgages, nobody can prove who actually owns the property – not the banks and not the defaulting buyers.
The consequence for years to come is that millions of properties nationwide will remain unsellable because of the massive cloud that hangs over all of their titles (would you buy a house if you couldn’t prove the person selling it was actually the owner?).
For the moment, Congress appears to be studiously ignoring this massive and growing title problem. Yet until this issue is resolved, the US housing market can never stabilize, and we are left instead with degrading and still overpriced housing stock that is no use to anyone except the defaulted borrowers who essentially become permanent squatters in their own homes.