Steps
- Study up on the No Income No Job No Assets and you'll find that a N.I.N.J.A. Loan is a type of subprime loan issued to borrowers who have nothing or do not need: Income, Job, or Assets.
- See N.I.N.J.A. loans as a "no-no" now for finance products, but it was especially known during the United States housing bubble of the 2000s but have gained wider notoriety due to the subprime mortgage crisis in July 2007 -- October 2008 as a prime example of a poor lending practice.[1]
- Find that lenders advertised "low-doc" and "no-doc" loans that required borrowers to provide little or no documentation of their ability to repay. They pushed the "N.I.N.J.A." loans, with adjustable rate mortgages that were barely affordable even at their teaser rates.
- Realize there were few problems when US interest rates were in the 1 to 2 per cent range, in the sub-prime ("low/no doc") market. However, since then the Federal Reserve Bank has tried to slow down inflation and slow down the subprime market by raising rates over a dozen times in a row driving payments up. Defaults on N.I.N.J.A. loans have become common and some sub-prime lenders have been driven to bankruptcy as a result.
- Look at how the sub-prime problems are affecting the global financial system because these N.I.N.J.A. loans did not just sit on US banks' books. They were sold to other institutions throughout the world.
- Observe that N.I.N.J.A. loans were sliced up, repackaged and sold to hedge funds, pension funds and other investors around the world. This is why markets took such a beating.
- Forget the old "prying/snooping" loan company as there is less looking into the private lives of their mortgage applicants. Traditional lenders wished to know something of the borrowers' background?their jobs, their wealth and such. In an age of annually rising home prices, these tedious details were out of use. That caused "low doc" and "no doc" loans to spread. Even borrowers with "No Income, No Job and No Assets" were welcome to apply.[2]
Tips
- Accepting only a fixed rate is best--unless you just want to move into a house on lower payment plans, but lose the house when you get to the high payments which are caused by variable rates that go up and the new payment is much higher.
- Financing will be difficult until the shortages of funds available for mortgage loans is overcome.
Warnings
- If you want to refinance that is difficult or impossible for many owners who owe more than the houses are worth now that the mortgage and financial bubble has burst.
- Avoid "Variable" rate loans--rates go up or down or have something like "Balloon" note--refinancing options. The "N.I.N.A." and "N.I.N.J.A." have low payments for a few years and then it goes up with variable rates or balloons.
- The danger of the "Liar" loan without verification of your income and job is that they have the temporary kind of rates like the N.I.N.A. and N.I.N.J.A. loans.
Sources and Citations
- ? Wikipedia: N.I.N.J.A. loan
- ? http://www.wordspy.com
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