Bank regulators are concerned that obtaining a mortgage loan is becoming a bit too easy, putting everyone from homeowners to certain bond investors at risk. Lenders have grown less demanding about the amount of proof borrowers must provide about their earnings and assets, which has resulted in a sharp rise in “low-doc” or “no-doc” loans. These loans allow borrowers to skip some or all of the traditional requirements for verifying income and assets, but they may allow some borrowers to exaggerate their financial strength and buy houses they really can’t afford.
SOURCE: THE WALL STREET JOURNAL
