User 262542

Unbelievably, the No-Doc Loans Movement Gains Steam

The only reason that No-Doc loans were made in the past is that mortgage originators, mortgage investors, mortgage borrowers and various and sundry intermediaries (MI companies, mortgage brokers, title companies, realtors, etc.) were comfortable and even attracted to the risk/reward of these loans. For a long time, this was an attractive proposition: Why invest more effort to create a well-documented, well underwritten loan when default rates (and more importantly, losses from default) are not significantly worse? This was true for a long time. Until it wasn't true anymore.

I expect that when/if the lending community is bullish on housing again, that's when No-Doc loans will return.