Hi
I have had a slight problem with a recent No Doc loan application. The client had previously applied with a lender and declared an income under the Low Doc policy. 4 Months later he came to me and we submitted a No Doc application to the same lender. This lender rejected it as a No Doc because they already knew his income.
It turns out the policy is if an income has been declared or proven, then they cannot approve a No Doc within 12 months of the first application.
The lender was RAMS in this case. We tried to argue our way out of it, but they wouldnt budge.
At this stage, I am not sure if other lenders have similar policies.
Terryw
Discover Home Loans
Parramatta
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That’s just amazing!
I often wonder who sits there and makes up these rules and what logic they base it on [blink]
It just makes no sense to the commone person!!!!
Investment Property Management
http://www.adprop.com.auHello Dr
If you put yourself in the lender’s position and think of it, it does make sense – even though not to my liking!
If the lender knows your income, then they know whether you can afford the repayments or not (by their calculations). So if a client comes back a few months later and wants more, they will be worried about affordability. Legally it would possibly be dangerous to lend in this situation.
However, if a year had passed, then the income could have risen and circumstances of the borrower changed.
Terryw
Discover Home Loans
Parramatta
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Terry,
this is a problem even when using different lenders if the mortgage Insurer has sen the application before. Thats why it is good to have LODOCS with both insurers on your panel.
Cheers,
Simon Macks
Residential and Commercial Finance Broker
***NODOC @ 7.15% to 70% LVR***
[email protected]
0425 228 985Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.
Most probably is the MI policy, about the 12months thing.
As RAMS uses, PRIME PMI and GE, Have you found which MI they went through terry, then go to say macquarie and see if you can push the loan through macquaire without using the MI that RAMS went through. Macquarie uses PMI and GE.
If you went through RAMS No Doc 80 policy, they most definitly went through PRIME as there MI. If so, then i cant see why macquarie couldnt look at the deal or even Interstar could look at it.
My thoughts…Good Luck bud.
Regards
Joshua McEwen
Finance Broker – WAhttp://www.prestigeloans.com.au
Brokers Lic 1297
Licensee Brett ChristieHi guys
Luckily got it set now. I asked RAMS if they could just submit it to a different mortgage insurer but this was also against their policy.
Terryw
Discover Home Loans
Parramatta
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Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Terryw,
You dishing it to another lender then?
If its a ABN issue, try WBC, remember they dont check ABN’s
.Regards
Joshua McEwen
Finance Broker – WAhttp://www.prestigeloans.com.au
Brokers Lic 1297
Licensee Brett ChristieJosh
WBC don’t do Nodoc loans and i think that’s what Terry was after.
Cheers
Richard Taylor
Residential & Commercial Finance Broker
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Oh yea No doc..
Regards
Joshua McEwen
Finance Broker – WAhttp://www.prestigeloans.com.au
Brokers Lic 1297
Licensee Brett ChristieI had the same issues twice with clients recently. One of them I got around by using an uninsured product through a lender called Stellar Finance (but they will only go to 70% uninsured) – the other one I got around because the client was insured with RAMS through PMI so we put the application through Stellar with Genworth instead of PMI – it’s a pest isn’t it. I have got the same problem with another client at the moment and this invester has already stated an income with PMI and Genworth so I think I am going to have to put them through a non-conformer for 80% or maybe try Westpac who do their own insurance.
Anita Marshall
Advanced Finance Solutions
http://www.advancefinance.com.au
[email protected]RAMS No Doc 80% primarily goes through PRIME. thats another option..
Joshua McEwen
Finance Broker – WAhttp://www.prestigeloans.com.au
Brokers Lic 1297
Licensee Brett ChristieYou’ve always got to find out what the client plans to do in the next 12 months with a lo doc. With one major bank you can declare an income one year, but the next year’s declaration can be no more then 20% higher.
On an interesting side-note, one of the other big fours tells me with their lo doc there is no ACTUAL FORM to fill in, you just plug it into the online system – now that is GREAT news for our lo doc clients….
Liz
Mortgage Lender
The opinions expressed in this public forum should not be construed as professional advice of any nature.
1300 780 826The primary reason why lenders are edgy about these sort of scenarios (and are likely to become more so) is when deals subsequently go pear-shaped and the borrower looks for an out. There have been a couple of legal cases lately where the courts found that the lenders (essentially) failed to pay close attention to the affordability question and simply relied on the security value, notwithstanding the client said they could afford it etc. etc.
In the two recent cases I am aware of, the mortgage got tossed out so you can expect lenders to start tightening up big-time and more scutiny around No Doc deals particularly.
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