No‑doc Loans as Hidden Credit Channel

Loans that require little or no income verification — called no‑doc or low‑doc loans — serve borrowers with hard‑to‑verify incomes (self‑employed, seasonal, new immigrants) but carry much higher interest and default risk; private money lenders often underwrite them with short terms and monthly rates of 2–6% (24–72% p.a.). Historically they made up a large share of originations before 2008 and can re‑emerge as a shadow credit source when mainstream underwriting tightens. — Recognizing no‑doc lending as a distinct shadow credit channel highlights a recurring regulatory blind spot with implications for financial stability, housing affordability, and consumer protection.