No‑doc Loans as Regulatory Arbitrage

Loans that omit income verification shift credit risk onto non‑bank lenders and short‑term private capital, letting borrowers and intermediaries access finance that formal rules would otherwise deny. Such instruments concentrate default risk, raise rates for marginal borrowers, and can migrate activity outside consumer‑protection regimes. — Understanding no‑doc lending as regulatory arbitrage clarifies how gaps between law (consumer‑protection rules) and market demand create fragile credit channels that matter for financial stability, housing affordability, and enforcement policy.