Just got wind of further policy revisions in the Lo Doc Mortgage Insurance market.
GE, via an email to their sales channel, has announced some changes to the Lo Doc loan policy applied to this type of loan.
In abbreviated form, the below is the main differences.All Lo Doc applicants now need to have 2 years ABN and 1 year GST rego.
No doc and Credit impaired Lo Doc products are withdrawn.
No Capping of premiums anymore. for Lo Doc
No Lo Doc refinance of investment properties.
No consolidation of debt – at all. for Lo Doc
All Lo Doc applications must be supported by the last 12 months BAS statements for all trading entities.
All Lo Doc applications must be supported with the last 3 months business trading account statements.As I am sure you can see, the above Lo Doc changes, along with PMI/QBE already withdrawing any kind of cover for Lo Doc refinance applications, all this adds up to mainstream Lo Doc being killed.
There will be a few options for the non-banks that charge a risk fee instead of
LMI, but you can rest assured there will be a nice margin on those loans.Any thoughts out there in investing land.
Tim
Hi Tim,
I guess it will be the majors only that balance sheet lend – which at the moment is LVR<60% for lo doc borrowings.
Its a real shame for those with genuine need, that could service a loan, and do have income, but I know from what I have seen from a couple of 'confidential internal memos' myself , that there is a significantly higher default ratio on Lo doc loans at present, so it in all honesty probably is not that bad a thing to happen.
Wonder just what the next 3 – 6 mths hold, although I think the worst is over……
Cheers
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