Liar Loan
Categories: Credit, Ethics/Morals
Bert wants to buy a house, but he can’t get approved for the loan amount he needs. This really has him down...until he has a brilliant idea. He’ll just lie about his income and assets on his next loan application. No big, right?
Of course, lenders are supposed to verify what we put on loan applications, but what if they don’t? What if they just shrug and say, “Sure, whatever,” and approve the loan based on our lies and deceit?
When that happens, we become the holder of what is known as a “liar loan”: a loan secured based on falsified information. Most of the time, liar loans are secured by people taking advantage of low-documentation loan programs, like those targeted to help lower-income folks, or those with iffy credit. There have been some legislative efforts to crack down on liar loans and the lenders who approve them, but as with Pokemon Go, it can be hard to catch ‘em all.