No Income / No Asset Mortgage (NINA)

What Is a No Income / No Asset (NINA) Mortgage?

No Income / No Asset mortgages are a type of reduced documentation mortgage program where the lender does not require the borrower to disclose income or assets as part of loan calculations. However, the lender does verify the borrower's employment status before issuing the loan.

This type of loan can make the most sense for gig workers, self-employed individuals, and other professionals whose sources of income are difficult to verify or consistently document.

Following the 2007-08 Financial Crisis, NINA loans have become harder to come by as financial firms have tightened their lending criteria.

Understanding No Income / No Asset Mortgages

No Income / No Asset (NINA) mortgages might be used by borrowers who do not want to, or cannot provide, financial information. This type of loan is instead approved on a declaration that confirms the borrower can afford the loan payments. NINA loans usually fall into the Alt-A classification of loans, with a borrower risk profile falling in between prime and subprime.

NINA loans have a higher interest rate than a prime mortgage since homebuyers who don't disclose financial data are more prone to default.

NINA loans are also known as No Doc mortgages. However, an actual No Doc loan does not require the borrower to prove their employment status in any way. A NINA loan will, although with far looser criteria than a standard loan. Because of these loose criteria, NINA mortgages and similar products are sometimes known as liar loans.

NINA vs. NINJA Loans

The slang term NINJA loan applies to credit extended to a borrower with no income, no job, and no assets. With this type of loan, the bank approves the mortgage based solely on the borrower's credit score.

Unlike a NINA loan, a NINJA loan can be issued to an individual with no income at all. NINJA loans have become less frequent in the wake of the 2007-08 Financial Crisis, as the government implemented new regulations to improve standard lending practices.

Risks of No Income / No Asset Mortgages

In some circumstances, a borrower may be enticed to use a NINA loan to obtain a mortgage that is outside of their income's reach. A borrower should never be persuaded by a lender or mortgage broker to use a NINA loan to obtain a mortgage if they will not reasonably be able to repay. Also, more traditional mortgages are reasonably available at a lower interest rate.

NINA loans played a role in the subprime mortgage crisis. Predatory lenders used this type of loan to approve mortgages that otherwise would not qualify. As a result, many homebuyers who took out NINA mortgages in the mid-late 2000s wound up defaulting on their loans.

As reported by the New York Times in November 2007, Freddie Mac announced it was marking down the value of its recently issued loans by a total of $1.2 billion. This mark-down was partly due to borrowers having failed to make payments on their NINA loans. The lending organization's CFO, Anthony S. Piszel, cited the issue as a result of lowered underwriting standards "across the board."