What Are NINJA Loans?
I was listening to the radio yesterday and I was listening to an investment show. The announcer was talking about mortgages and I heard him mention a NINJA loan.
It stands for “No Income No Job or Asset” verification! If that isn’t a liar loan I don’t know what is. You basically show up at the bank(or mortgage broker’s office) and say I have a job and assets to qualify for this loan to buy a house but I don’t want to show you anything. Just take my word for it!
Talk about easy money and excess liquidity! No wonder there has been such a boom in the real estate prices in some parts of the country. I wouldn’t be surprised if these loans end in tears for someone people.
Seems like there’s a lot of easy money chasing global investments. The Swiss and Japanese carry trades (where borrowers could borrow money under 2% in these currencies and invest them in something else, say a US T bill yielding 5%, and pocket the difference) has created a lot of excess liquidity that is chasing investments all over the place.
Some people think that asset prices have now become a function of liquidity and are no longer a fucntion of value.
I wouldn’t be surprized if the subprime meltdown caused coastal property prices to drop 40-50% from the peaks.
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March 29th, 2007 at 8:34 pm
There is too much money chasing too few assets. Plus, you’ve got a lot of people who think they are REI geniuses because they made money in the last 5 years. It’s like a toxic cocktail that’s going to turn into a bomb once the punchbowl is removed. Realistically, households earning the median income ($50K) can afford to buy a house 2 to 4 times their annual income or $100K to $200K, not $500K or $700K or anything else. Prices will fall. It’s just going to take time.
March 6th, 2008 at 1:34 pm
I have done the nina loan as I had always called it. It is much smoother to get. You do not have to deal with all of the paper work. You just go off of your credit score. I got it through a big bank. The interest rates are generally a 1/4 point higher, but when you don’t want to “PROVE” stuff, it is better for some people. Having to explain where cash comes from is not fun, especially if you have to do it often for lots of transactions…