A category of loans (as distinct from prime and subprime) which, though characterized by high credit scores, doesn’t meet the strict standards of prime loans. One of the most common non-conformities of liar loans is the lack of verifiable income. Liar loans are typically better than subprime loans but are inferior to prime loans, mainly due to incomplete documentation (stated assets, stated income, low documentation, or no documentation) and a very high debt-to-income ratio (or a very high property loan-to-value ratio).
Liar loans were rationed to applicants without requiring them to provide income verification or documentation of assets. Instead, the approval for these loans is based solely on an applicant’s credit score.
Liar loan is also known as an alternative documentation loan or an alt-A.
