I heard somewhere that the lies on the liar loans technically were not illegal or fraudulent.

This is something I didn't get out of this article. Was actual fraud or crime committed by those who overstated their income? Or, due to some technicality, was it legal and proper to overstate income on those mortgage and refi applications?

From what I heard, the "stated income" was recognized as a fiction by all parties, and thus was not a fraud. Don't know who's right here.

It's fraud just like any other mortgage fraud. Anyone who tells you different is a liar.

Read the mortgage application that everyone signs. The third page advises you that any fraudulent statements are violations of federal law and that you swear everything in the application is true and correct. Pretty simple