“Liar loans,” or mortgages approved without proof of the borrower’s income or assets, could prolong the mortgage market collapse with a second wave of losses after the subprime mortgage crisis, the Associated Press reported.

Moody’s Economy.com predicts that liar loan losses could reach $100 billion, in addition to $400 billion in expected losses from subprime loans.

Liar loans, which often offered riskier features, such as adjustable-rate mortgages that gave borrowers the option to defer some of their interest payments and add them to the loan’s principal, allowed home buyers to afford homes in areas of the country where prices were skyrocketing. Now housing prices have fallen dramatically in those markets and lenders are requiring full documentation of income and assets, preventing many with liar loans from refinancing.

Officially, these loans are called Alternative-A loans because those taking out the loans are a step below A-credit, or prime, borrowers.

Half of Fannie Mae and Freddie Mac’s combined $3.1 billion loss in the second quarter was a result of default liar loans. Twelve percent of Countrywide Financial Corp.’s $25.4 billion in “pick-a-payment” loans are in default and 83 percent had little or no documentation, according to a Securities and Exchange Commission filing last week. Bank of America Corp. now owns the company.