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What was a NINJA loan?

A-Level, IB
AQA, Edexcel, OCR, IB, Eduqas, WJEC

Last updated 29 May 2023

A "ninja loan" is a term that gained popularity during the subprime mortgage crisis of the late 2000s. It refers to a type of mortgage loan that was issued to borrowers with no income, no job, and no assets. The acronym "NINJA" stands for "No Income, No Job, and no Assets."

During the housing bubble, lenders became increasingly lenient in their lending practices, approving loans for individuals who did not meet traditional lending criteria. Ninja loans were particularly risky because they were granted without verifying the borrower's ability to repay the loan. Borrowers were not required to provide documentation of income, employment history, or assets.

These loans were often associated with subprime mortgages, which were offered to borrowers with lower credit scores and higher risk profiles. Lenders who issued ninja loans believed that rising housing prices would offset the risks, as borrowers could sell their properties at a profit or refinance their loans before facing financial difficulties.

However, when the housing market crashed and home prices plummeted, many ninja loan borrowers found themselves unable to afford their mortgage payments. This led to a high rate of default and foreclosure, contributing to the broader financial crisis.

The ninja loan phenomenon highlighted the dangers of lax lending standards and the potential consequences of providing loans to individuals without thoroughly assessing their creditworthiness.

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