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Mortgage fraud: $500b of 'liar loans'
Topic Started: 11 Sep 2017, 02:27 PM (4,856 Views)
Ex BP Golly
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Rufus
11 Sep 2017, 04:54 PM
You are right, almost everyone exaggerates on their loan application, but it doesn't matter because every detail that matters is checked and rectified before the loan is submitted.

This story is just one more load of twaddle that is being pedaled by people who don't know anything about the lending process.
It does matter as every lie is a technical breach of contract.

This makes it much easier for banks, if and when they require, to foreclose loans.
WHAT WOULD EDDIE DO? MAAAATE!
Share a cot with Milton?
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zaph
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Ex BP Golly
11 Sep 2017, 06:01 PM
It does matter as every lie is a technical breach of contract.
No, it isn't.
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Rufus
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Ex BP Golly
11 Sep 2017, 06:01 PM
It does matter as every lie is a technical breach of contract.

This makes it much easier for banks, if and when they require, to foreclose loans.
No, at the point of application no contract has been entered into. The loan contract is signed when the loan documents are forwarded to the borrowers, which by the way are often emailed these days.

In any case having an optimistic view of the value of assets held is not a crime, especially when the applicant is not an expert in valuing these assets. It's basically considered a guess by the applicant.

BTW there is a new national mortgage form being introduced. Here is the info from Westpac.

Quote:
 
National Mortgage Form (NMF).

Paper and digital Mortgage templates are being replaced across all Australian jurisdictions with a new National Mortgage Form (NMF). This is due to a Council of Australian Governments' (COAG) backed initiative to deliver a single, national e-Conveyancing solution to the Australian property industry with a vision of achieving a fully digitised exchange function. The NMF will cater for both residential and commercial mortgages.

Westpac has now adopted the NMF for all new loan applications across Retail and Business. A transition period will also be in place to allow for the old format mortgages (already issued to customers) to be accepted up to Friday 29 December 2017.

The NMF will result in the following changes:
•Mortgages for all jurisdictions will look different for all new loan applications.
•Mortgage Signing Instructions sheets will be included (as the first page) for all mortgages to assist the Doc Sign Up process (a copy of each of these is also contained in the Broker Net Forms section).
•All Mortgages will be single sided so printer settings will need to be checked.


Just thought that you might like to know.


Edited by Rufus, 11 Sep 2017, 06:23 PM.
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zaph
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Sometimes banks get income wrong in the opposite way.

I work for a PBI(charity). We receive ~$16k pa salary sacrificed wages to be paid in rent, mortgage payments etc. So a $76k wage comes with a taxable income of 60k. Staff applying for loans regularly have to explain, explain and explain that they earn 76k, no 60. Then the bank stuffs up any HECS debt repayments due.
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hidflect
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Rufus
11 Sep 2017, 04:54 PM
You are right, almost everyone exaggerates on their loan application, but it doesn't matter because every detail that matters is checked and rectified before the loan is submitted.

This story is just one more load of twaddle that is being pedaled by people who don't know anything about the lending process.
"...almost everyone exaggerates on their loan application, but it doesn't matter.."

Holy crap. That quote will rank up alongside the shoeshine boy who gave JP Morgan stock tips as one of the most unfortunately timed pieces of blithe idiocracy ever casually rolled out under a smug grin, EVAH!

"All them paperwork don' matter! Da banks got pleny o' dosh an' gold an' stuff. Oi seens it meself on the Teebee in tha' movie, Goldfinger."

Let's start with mortgage insurance. When the underwriters get hit for Billions to cover a tsunami of failed mortgage payments, they will crawl over every letter fold and bent paperclip to find reasons not to pay. If I lie on a claim saying I'm a non-smoker and I explode getting hit by lightning, the insurance company won't pay out. Because it saves them a lot of money. What do you think they'll do with all those mortgage broker "massaged", signed and notarized affidavits? (as if they're not already aware they're off the hook in many cases)

"Oh look, you said you earned $87,000PA but you only payed $12,000 in taxes... hmm.. either you're defrauding the government or the bank. Which is it..?"
"THE MORTGAGE BROKER MADE ME DO IT!"
Bank eats the loss.

Which is exactly what happened on that 4 Corners Report, if we recall. Poor old biddy hustled through a word puzzle of "exaggerations". The ANZ CEO had to take care of it personally...
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Chris
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Rufus
11 Sep 2017, 04:54 PM
You are right, almost everyone exaggerates on their loan application, but it doesn't matter because every detail that matters is checked and rectified before the loan is submitted.

This story is just one more load of twaddle that is being pedaled by people who don't know anything about the lending process.
I'm pretty sure they are referring to what has been reported as wide spread broker fraud whereby they amend documents in order to get the applicant approved.

http://www.news.com.au/finance/business/banking/mortgage-fraud-is-the-dirty-secret-that-could-spark-a-financial-meltdown-economist-warns/news-story/53bf8bf125b31e39e0d05c61b3f34d06


And this is one of many many articles on the topic Rufy so please let me know if you require more links as proof, happy to provide them.
Edited by Chris, 11 Sep 2017, 06:47 PM.
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herbie
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I think I'd rather trust Rufus than UBS:

4.1 Holocaust assets (1930s–1998)
4.2 U.S. trade embargoes (2003–2004)
4.3 Indian stock market crash (2004–2009)
4.4 U.S. discrimination lawsuits (2001–2005)
4.5 U.S. tax evasion (2005– )
4.6 Rogue trader scandal (2008–2012)
4.7 Lehman Brothers notes (2007–2013)
4.8 U.S. municipal bond market rigging (2001–2013)
4.9 Arms sales and Indian money laundering (2003–2011)
4.10 Libor benchmark rigging (2005–2012)
4.11 Currency benchmark rigging (2003– )
4.12 U.S. mortgage-backed securities (2004–2015)
4.13 French tax evasion (2002– )
4.14 German tax evasion (2004– )
4.15 Belgian tax evasion (2004– )
4.16 Timber corruption and Malaysian money laundering (2006– )
4.17 Forex manipulation scandal (1991–2015)
4.18 Puerto Rico bond funds
4.19 Panama Papers (2016– )

I particularly enjoyed tha bit in 4.6 where it states he "was a gamble or two from destroying Switzerland's largest bank for his own benefit" - Sheesh, talk about not havin' ya own effing systems tagether/people wot live in glass houses throwin' stones/gettin' tha shit outta ya own nest before pointin' out someone else might have some in theirs - LOL

Source: https://en.wikipedia.org/wiki/UBS

Wonder if they're short tha Aussie banks? - LOL LOL LOL

Edited by herbie, 11 Sep 2017, 07:02 PM.
A Professional Demographer to an amateur demographer: "negative natural increase will never outweigh the positive net migration"
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deluded
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Sydneyite
11 Sep 2017, 05:55 PM
The house is the security for the loan - it is not and never will be the "banks asset". The banks asset is the loan itself, ie the future cash-flow contractually required to be paid by the borrower for the contracted period of time.
I thought Rufus would reply with that line. But seems like I baited someone else.

It's a philosophical debate. Technically you say the correct thing, but I'm sure you can see how it can be considered the bank's asset given that it is their money being used to buy it. Would the bank lend the money if they weren't able to force possession of the asset? If they can force possession of it, then whose asset is it really?
Edited by deluded, 11 Sep 2017, 07:15 PM.
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Rufus
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hidflect
11 Sep 2017, 06:45 PM
"...almost everyone exaggerates on their loan application, but it doesn't matter.."

Holy crap. That quote will rank up alongside the shoeshine boy who gave JP Morgan stock tips as one of the most unfortunately timed pieces of blithe idiocracy ever casually rolled out under a smug grin, EVAH!
No it won't - every experienced lender knows that applicants exaggerate values, so there are systems in place to check every detail that matters.
Do you really think that any bank would trust you to provide accurate information - they don't trust you for one inch. They check all vital information that matters to the loan application.

So people tell us their house is worth $1,000,000 - that can be check to a high degree of accuracy using a desktop valuation.
So you say you have $200K in savings - good, show us your bank statements.
So you say you earn $150K pa - good show us your payslips and they are checked against the salary credited to your account over the last few months. Will your boss confirm that when he gets a phone call from the bank?
So you say you only have one Visa card with a $2000 limit - good, show us your Visa statement and can you explain what the payments to Amex and MasterCard that show on your statement are all about, we want to know those details, as well as the regular payments to your ex and the regular payments for your car loan - what's that all about? Why didn't you declare it?

FFS how gullible are you.

No one cares if they fudge a bit on things that aren't relied upon for income, or security. but if you BS in the loan application on things that matter the bank may tell you to go somewhere else. I find it hard to believe that people would expect otherwise.
deluded
11 Sep 2017, 07:14 PM
I thought Rufus would reply with that line. But seems like I baited someone else.

It's a philosophical debate. Technically you say the correct thing, but I'm sure you can see how it can be considered the bank's asset given that it is their money being used to buy it. Would the bank lend the money if they weren't able to force possession of the asset? If they can force possession of it, then whose asset is it really?
The loan is the banks asset, Sydneyite is 100% correct and you know it - that was a troll question.
Edited by Rufus, 11 Sep 2017, 07:17 PM.
Take risks - if you win you will become wealthy, if you lose you will become wise
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herbie
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zaph
11 Sep 2017, 06:34 PM
Sometimes banks get income wrong in the opposite way.

I work for a PBI(charity). We receive ~$16k pa salary sacrificed wages to be paid in rent, mortgage payments etc. So a $76k wage comes with a taxable income of 60k. Staff applying for loans regularly have to explain, explain and explain that they earn 76k, no 60. Then the bank stuffs up any HECS debt repayments due.
The genuinely entertaining ones are the tradies 'n working girls who very genuinely earn 'rather' more than they can prove - Through having done lotsa cashies ta minimise tax of course; Then bitch about tha fact no banks will lend 'em no money ta buy a house - LOL
A Professional Demographer to an amateur demographer: "negative natural increase will never outweigh the positive net migration"
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