Akademik

n.

A loan or mortgage given to a person who has no income, no job, and no assets. Also: NINJA loan. [From the phrase, No Income, No Job or Assets.]

It's not as though the absurd excesses of the mortgage market were some big secret. Lenders brazenly advertised "low-doc" and "no-doc" loans that required borrowers to provide little or no documentation of their ability to repay. They pushed "ninja" loans, requiring no income, job or assets. And adjustable rate mortgages that were barely affordable at their teaser rates.

—"Risky-mortgage meltdown was predictable, preventable," USA Today, August 10, 2007

In 2004, when US interest rates were 1 per cent, there were few problems in the sub-prime market. However, since then the Federal Reserve Bank has raised rates 17 times in a row. Defaults on Ninja loans have become common and some sub-prime lenders, such as New Century Financial, have been driven to bankruptcy as a result.

Why is this a problem for homeowners in the UK?

The sub-prime difficulties are affecting the global financial system because these Ninja loans do not just sit on US banks' books. They are sliced up, repackaged and sold on to hedge funds, pension funds and other investors around the world. This is why equity markets have taken such a battering recently.

—Paula Hawkins, "Will we feel the chill?," The Times (London), August 24, 2007

On top of all this, banks are prying less into the private lives of their mortgage applicants. Traditionally, lenders wished to know something of the borrowers' background—their jobs, their wealth and soforth. In an age of perennially rising home prices, these tedious details could be dispensed with. "Low doc" and "no doc" loans have proliferated. One mortgage provider, HCL Finance, advertises itself as the "home of the 'no doc' loan." Among the products listed on its Web site is the NINJA loan: Even borrowers with "No Income, No Job and No Assets" are welcome to apply.

—Edward Chancellor, "Ponzi nation," Institutional Investor, February 1, 2007