Ninja borrowers are individuals who have no income, no job, and no assets. The term 'Ninja' is an acronym derived from the first letters of the words 'No Income, No Job, No Assets'. These borrowers are considered high-risk because they lack a stable source of income and assets that could be used as collateral for the loan. During the 2007/2008 financial crisis, the number of Ninja borrowers increased significantly as lending standards were relaxed. This allowed individuals who would typically be barred from borrowing due to their high-risk status to secure loans. However, these loans were often defaulted on after the first few months of the repayment schedule, contributing to the financial crisis.

Choice A is incorrect. While it's true that Ninja borrowers may not have been subjected to rigorous vetting, this is not the defining characteristic of such borrowers. The term 'Ninja' stands for 'No income, No job, and No assets', which means these borrowers lack a stable source of income, employment and significant assets.

Choice B is incorrect. Having a near-zero credit history does not necessarily qualify one as a Ninja borrower. Although it's possible for Ninja borrowers to have minimal or no credit history, the key distinguishing feature of these individuals is their lack of income, job and assets.

Choice C is incorrect. Insufficient assets to secure mortgages might be a characteristic of some Ninja borrowers but it's not what primarily defines them. The main attributes are no income, no job and no assets regardless of whether they are seeking mortgages or other types of loans.

Things to Remember

• Ninja borrowers are considered high-risk borrowers due to their lack of income, job, and assets. This makes it difficult for them to secure loans from traditional lenders.
• The term 'Ninja' is an acronym that stands for 'No Income, No Job or Assets'. It originated from the subprime mortgage crisis in the United States.
• Loans given to Ninja borrowers are often referred to as 'Ninja Loans'. These types of loans were common during the housing bubble in the early 2000s.
• Ninja Loans are typically unsecured because they lack collateral. This increases the risk for lenders as there is no asset to seize if a borrower defaults on their loan payments.
• Credit risk management involves assessing and managing risks associated with lending