NINJA loan
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NINJA loan
Alternative forms
Etymology
Coined by the American lending company HCL Finance from an approximate initialism of
no income, no job, no assets.
Noun
NINJA loan (
plural NINJA loans)
A
subprime loan issued to
borrowers with no
job,
income, or
assets.  [quotations ▼
all fine and well.....but you are misinterpreting what it means...
It means that one did not need to prove
that the information they gave on the application was correct.
Not a bit, you just refuse to admit you are wrong.
[Excerpt]
Tobias and Lindsay's NINJA loan
Tobias and Lindsay's mansion. (Netflix)
In the third episode, "Indian Takers," Lindsay and Tobias Funkë decide to make a new start (or, to use the spelling from Tobias' license plate, "ANUSTART") by buying a home together. They inform their realtor James Carr (Ed Helms) that they have no income coming in, no assets, no credit, no jobs, and no work ethic. No matter — Carr offers them a "NINJA" loan, available to borrowers in exactly that position ("No Income No Job and no Assets"). They end up with guest gatehouses and a mansion that looks like this:
NINJA loans are, shockingly, a real thing. Or at least they were, before the housing crash. But they're slightly different from the kind of loan that Tobias and Lindsay get. NINJA loans, also called NINA loans ("No Income No Assets") weren't loans made to people who actually had no income or no assets, necessarily; they were loans where the lender didn't ask for asset and income information from the borrower.
In March 2007, well before the proverbial fan had been hit, my colleague Steve Pearlstein had a
great explanation of these products, and other crazy options available to borrowers pre-crisis, like "liar loans" (where, unlike NINA loans, income and asset information was requested but no documentation was required), "balloon mortgages" (where only interest has to be paid for 10 years, and then a big lump sum payment for the principal is due), and "piggyback loans" (where money borrowed in one mortgage is used as a down payment to secure another mortgage).
So why were banks making these loans to people? Weren't they obviously going to fail? The issue, as explained in Planet Money's great episode,
"The Giant Pool of Money", is that the securities that banks turned these mortgages into actually performed really well. That's because housing prices kept rising, so you could always pay for previous mortgages using the equity that accrued to the house since the initial mortgage was made. Mike Francis, a former residential mortgage trader at Morgan Stanley, explained it to Planet Money this way:
It's obvious that they performed well, now, because their property kept increasing in value. And over time, they could continue to take cash out of it, if they needed to, to pay the bill. In other words, they could take out another loan from the bank, against the value of their house, which because of the bubble was now worth more than they bought it for.
These loans, called home equity lines of credit, became very popular in the early to mid 2000s partly because they were easy to get, but partly because people needed them to continue making their original mortgage payments. To pay off their debts, they went into more debt.
But even NINA loans involved checking borrowers' credit scores. And given that the entire series started with Lindsay and Tobias fleeing a hotel because they couldn't pay their bill, I somehow doubt their credit score would have been sufficient for a giant NINA loan even in the glory days of 2006. The foreclosure the Fünkes faced, at least, was pretty realistic.
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