However, as originators became increasingly confident that they could sell off the loan, documentation and credit standards declined to the nowinfamous extreme of "Low doc/NINJA" (no income, job or assets) loans to U.S. subprime borrowers.
Performance has deteriorated accordingly: for example, default rates for U.S. subprime mortgage loans made in 2006 have already reached almost 8 per cent less than two years after origination, a rate 2.5 times the comparable figure for similar loans made in 2004. 5 There also appear to have been a number of problems with incentive alignment in several global financial institutions.