What is a Liar Loan?
Liar loans are a type of mortgage arrangement that is structured with a low-documentation or no-documentation format. Because the amount of detail included in the mortgage arrangement is limited and may go unverified, there is a greater degree of possibility for unethical borrowers and lenders to misrepresent the current situation of the borrower or the terms associated with the mortgage. In spite of the degree of risk associated with a liar loan format, mortgages of this type are commonly utilized. Both low-documentation and no-documentation loans tend to focus more on two important aspects of the borrower’s qualifications. First, the current credit score of the borrower is ascertained. If the credit score is within an acceptable range, the next consideration is the requested amount of the mortgage. If the loan to value ratio of the mortgage appears to be within reason in light of the reported gross income of the borrower and the current credit score, there is a good chance the mortga
