{"id":12006,"date":"2015-09-09T06:15:40","date_gmt":"2015-09-09T11:15:40","guid":{"rendered":"http:\/\/olduvai.ca\/?p=12006"},"modified":"2015-09-09T06:15:40","modified_gmt":"2015-09-09T11:15:40","slug":"liars-loans-are-backbut-with-a-twist","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=12006","title":{"rendered":"\u201cLiars Loans\u201d are Back\u2026but with a Twist"},"content":{"rendered":"

\u201cLiars Loans\u201d are Back\u2026but with a Twist<\/a><\/h3>\n

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Most of you will be intimately familiar with the roll \u201cliars loans\u201d played in last decade\u2019s financial crisis. In a nutshell, these were loans in which the borrower was encouraged to lie about his or her income in order to qualify for a mortgage they couldn\u2019t actually handle. In the aftermath of the crisis, regulations have been put in place to ensure lenders verify income and the ability of the borrower to service the mortgage. As is always the case, there\u2019s a loophole, and Wall Street is already exploiting it.<\/p>\n

The loophole pertains to loans for homes that will be used for business purposes. Unsurprisingly, people are lying about the true use of their homes to avoid regulations. Some of these are then being packaged in AAA rated bond issuances.<\/p>\n

From\u00a0Bloomberg<\/a><\/em>:<\/p>\n

The pitch arrived with an iconic image of the American Dream: a neat house with a white picket fence.<\/em><\/p>\n

But behind that picture of a $2.95 million home in Manhattan Beach, California, were hints of something darker: liar loans, those toxic mortgages of the\u00a0subprime era.<\/em><\/p>\n

Years after the great American\u00a0housing bust, mortgages akin to the so-called liar loans \u2014 which were made without verifying people\u2019s finances \u2014 are creeping back into the market. And, like last time, they\u2019re spreading risks far and wide via Wall Street.<\/em><\/strong><\/p>\n

Today\u2019s versions bear only passing resemblance to the ones that proliferated in the mid-2000s, and they\u2019re by no means as widespread. Still, they reflect how\u00a0the business is\u00a0starting to join in the frenzy that\u2019s been creating booms in everything from\u00a0subprime car loans to junk-rated\u00a0company bonds.<\/strong><\/em><\/p><\/blockquote>\n

Just in case you aren\u2019t up to speed on the subprime auto bubble:<\/p>\n

Subprime Auto Loan \u201cTitan\u201d Foolishly Proclaims There\u2019s Nothing to Worry About<\/a><\/strong><\/p>\n

Gotta Keep Dancing \u2013 Honda Executive Laments \u201cStupid\u201d Auto Loans Driving U.S. Sales Higher<\/a><\/strong><\/p>\n

Chinese Homebuilders Expand in America as U.S. Auto Loans Hit Record Levels<\/a><\/strong><\/p>\n

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 <\/p>\n

…click on the above link to read the rest of the article…<\/p>\n","protected":false},"excerpt":{"rendered":"

\u201cLiars Loans\u201d are Back\u2026but with a Twist Most of you will be intimately familiar with the roll \u201cliars loans\u201d played in last decade\u2019s financial crisis. In a nutshell, these were loans in which the borrower was encouraged to lie about his or her income in order to qualify for a mortgage they couldn\u2019t actually handle. […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2],"tags":[3891,83,175,312,1583,2340,7685,4285,6174,8818,860],"class_list":["post-12006","post","type-post","status-publish","format-standard","hentry","category-economics","tag-auto-loans","tag-bloomberg","tag-credit","tag-financial-crisis","tag-housing","tag-housing-market","tag-liar-loans","tag-liberty-blitzkrieg","tag-michael-krieger","tag-mortgage","tag-wall-street"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/12006","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=12006"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/12006\/revisions"}],"predecessor-version":[{"id":12007,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/12006\/revisions\/12007"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=12006"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=12006"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=12006"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}