What are 'Liar Loans'?

Liar loans are a term that refers to loans or mortgages that were granted with little or no request for qualification documentation, such as proof of income.

On certain low-documentation loan programs, such as stated income/stated asset (SISA) loans, income and assets are simply stated on the loan application.

Then there are still other loan programs known as no income/no asset (NINA) loans, where the applicant essentially does not have to provide any proof of eligibility. These types of loans opened the door for fraudulent lending practices, which ultimately bankrupted several mortgage companies during the 2008 financial crisis.

Many large banks such as Bank of America are still settling claims with the government over misleading loans.