A no documentation mortgage is a kind of mortgage that does not require mortgage lenders to note down or document the mortgage borrower’s assets or incomes. In the present times, no documentation mortgages are no longer issued. In fact, these mortgages are sometimes considered illegal as they completely violate the primary requirement of lending, i.e.

No document mortgages tend to carry quite a high rate of interest and require a much higher down payment when compared to any other types of mortgage. Nowadays, very few cases of no documentation mortgage are seen. According to analysts, the idea of no documentation mortgage was formulated to make home purchases easier for self-employed professionals; especially for the ones, who had plenty of cash to make the down payment, but could not file their income with the IRS due to stringent tax laws.

Significant features of no documentation mortgage
The term ‘no documentation mortgage’ refers to the kind of mortgage with which a mortgage lender lends a mortgage to a person without even documenting the borrower’s income or any kind of fixed or current assets. In today’s world where loans are provided based on credit ratings and the borrower’s financial capabilities, the concept of no documentation mortgage barely exists.

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Listed below are some significant features of no documentation mortgage.

• Easy disbursement: No documentation mortgages are ironically known as ‘NINJA’ loans, which mean no income, no jobs, and no assets. The letter ‘J’ in the word NINJA, stands for ‘job.’ It hardly matters whether the borrower is employed or not, as the disbursement of the loan takes place soon after the application is processed.
• Minimal documents: A no documentation loan requires no submission of documents related to employment. However, a credit check is usually done to get a deep insight into the borrower’s creditworthiness. Lenders, on the other hand, disburse the loan in order to gather more amount as interest, since this type of mortgage has a higher rate of interest and down payment when compared to any other types of mortgages and loans.
• Risky in nature: No documentation mortgage is very risky in nature. Any types of mortgage or loan are approved after verifying whether the borrower will be able to repay. In a no documentation mortgage, no such verification is required. There is no way for the lender to know the borrower’s ability to repay the amount.

Is no documentation mortgage commonly used today?
Nowadays when getting a loan is a tedious process, a no documentation mortgage can make it quite easy. Unfortunately, it is now seldom used. The best part about this type of money lending process is that a borrower does not need to worry about getting the mortgage approved. Even without any income or asset, one can apply for this type mortgage, as it requires no information about income or any other kind of asset of the borrower.

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