Now that we're in the midst of the post-housing bubble foreclosure mess, it's easy to lose sight of part of how we got here: "liar's loans."
Liar's loans were mortgages that didn't require the wannabe borrower to prove she could repay the loan. They came in various flavors, allowing the borrower to state without proving her income, or assets, or both. These loans violated all the basic principles of underwriting, the process banks abandoned during the housing bubble. And it's no wonder most are ending in foreclosure.