Lies Are Growing In Loan Process

Relaxed credit standards can lead to outright fraud.The Washington Post has some good information on the new credit standards in the housing market:

Problems with "stated income" transactions. Known in the industry as "liar loans" or NINAs (no income, no asset verification), these programs were originally designed for highly creditworthy professionals and owners of small businesses who prefer not to show all their documentation on income, investments and other financial assets. Stated income means you state your income and estimate your assets, not prove them with documentation. Typically, stated income loans also carry a slightly higher interest rate or fees to compensate for the perceived higher risk.

But during the housing boom, such mortgages routinely have been extended to applicants with shaky credit profiles and insufficient incomes to qualify for their home purchases.