I have this morning received an interesting email from a forum member (whose name i will withhold for obvious reasons) who was looking for us to assist them with finance.
Whilst the number details were a little short on the member asked whether we would be prepared to ignore the number of dependant they had and pretend he was totally single.
Of course our swift response was NO and hence the member decided not to proceed further with an application thru us.
It is for these very reasons that the finance markets are in the current state they are in.
No Doc and Lodoc Loans were aptly named Liar Loans in the US with borrowers / some mortgage brokers alike thinking it was appropriate to deliberately lie or mislead lenders on an application for finance. Falsely declaring income is certainly fraud however also failing to disclose other liabilities such as personal loans, credit cards or dependants is an offence in it's own right.
Thankfully much of the old Nodoc / Lodoc lending has disappeared with the introduction of the new Credit Laws but it is still interesting that a potential client feels that a Broker would falsely submit an application on his behalf merely for a commission.
Part of the new legislation requires a Broker to make prudent enquiries to ensure that the information they are submitting is true and accurate whether this be in relation to income, expenditure or lifestyle.
To all potential borrowers you are better off telling your Mortgage Broker the whole story from the start as often there is a lending solution or niche product that will suit your circumstances where the application can be submitted truthfully and without the need for non disclosure.
In fact in this case i am sure that had the borrower disclosed 3 dependants this would have not excluded the deal from being done.
Here endeth todays lesson.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
And what a great lesson it is for all the new and inexperienced investors and Brokers and, perhaps, even some of the 'old school' investors and Brokers. Fraud is fraud and if we, the Broker help facilitate that fraud, well …….. Thanks Richard.
Kind regards
Anthony your reply is so true.
Sometimes you can ask all the questions and make all the checks and balances and if the client does not intend to tell you everything well there is little you can do (Of course gut instinct or feeling helps decipher whether you want to proceed with the deal).
In saying all of this i cannot stress that lenders terms, policies and conditions all vary and often where we know everything there is s still away round.
If a client had a past paid default and tells us we have lenders who will look at the deal.
If a client has a credit with a high limit but pays it off every month and can substantiate this then there are lenders who wont factor in the limit as an expense. (I actually have an application approved this morning from a forum member who has a C/C with a limit of $55K and pays it off religously every month. A couple lenders declined the deal on serviceability but he called me told me the entire reasons for the limit and we placed the application at great rates and the deal has been approved).
This goes for almost everything aspect of the application and you would be suprised what can get done when you know the facts and how to handle the deal.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
All so true and borne out by an article I received from an Aggregator this evening that went:
By Tim Neary
March 22, 2011A former St George lending officer is facing court on charges of conspiracy and mortgage fraud, reports The Daily Telegraph.
Police allege that Hxxx Cxxxxxx inflated property values and faked mortgage documents for her own financial gain.She is currently fighting 10 charges including conspiracy to 'cheat and defraud financial institutions of large sums of money'.
Yesterday the court heard that Cornell verified one client was earning $89,976 a year working at a bakery, but the person was not employed at the bakery at the time."
Cheers, PaulPaul Dobson | Vendor Finance Institute
http://www.vendorfinanceinstitute.com.au
Email Me | Phone MeAn alternative way to finance your home.
Totally agree! and unfortunately this is a common story! I remember one loan clearly..maybe because the loan amount was $2M+ but the convo went like this…
” No i don’t have any kids”
” you sure?”
“Yes it’s only me and my wife”
“Why does your statement have regular “family allowance coming in?”
“o that…my son and daughter are 2 and 3..dont worry about them….they dont cost much “Sigh!
P.s The loan was fine and we end up placing this loan through to the lender with the correct and full details.
Moral of the story, if your provide false details your not only wasting our time..but your own!! and you risk losing your 10% deposit ( signed contract)
Regards
MichaelMick C | Shape Home Loans
http://www.shapehomeloans.com.au/
Email Me | Phone MeSame Banks. Better Rates. Served With a Passion.
Qlds007 wrote:I have this morning received an interesting email from a forum member (whose name i will withhold for obvious reasons) who was looking for us to assist them with finance.Whilst the number details were a little short on the member asked whether we would be prepared to ignore the number of dependant they had and pretend he was totally single.
Of course our swift response was NO and hence the member decided not to proceed further with an application thru us.
It is for these very reasons that the finance markets are in the current state they are in.
No Doc and Lodoc Loans were aptly named Liar Loans in the US with borrowers / some mortgage brokers alike thinking it was appropriate to deliberately lie or mislead lenders on an application for finance. Falsely declaring income is certainly fraud however also failing to disclose other liabilities such as personal loans, credit cards or dependants is an offence in it's own right.
Thankfully much of the old Nodoc / Lodoc lending has disappeared with the introduction of the new Credit Laws but it is still interesting that a potential client feels that a Broker would falsely submit an application on his behalf merely for a commission.
Part of the new legislation requires a Broker to make prudent enquiries to ensure that the information they are submitting is true and accurate whether this be in relation to income, expenditure or lifestyle.
To all potential borrowers you are better off telling your Mortgage Broker the whole story from the start as often there is a lending solution or niche product that will suit your circumstances where the application can be submitted truthfully and without the need for non disclosure.
In fact in this case i am sure that had the borrower disclosed 3 dependants this would have not excluded the deal from being done.
Here endeth todays lesson.
Cheers
Yours in Finance
Excellent post – well said Richard.
Cheers
Jamie
Jamie Moore | Pass Go Home Loans Pty Ltd
http://www.passgo.com.au
Email Me | Phone MeMortgage Broker assisting clients Australia wide Email: [email protected]
Hi all,
I am the Forum Member Richard is referring to.
Firstly, I always believe in being honest to the person I’m dealing with, hence this was the question I posed to Richard: to paraphrase: I still have 3 dependents which I don’t disclose, will you have an issue with that?
I will not put anyone livelihood in danger. As a former mortgage broker myself, I always consider assisting someone with their loan requirements as a “partnership in and for progress.” I wouldn’t want anyone lying to my face either.
As a guiding principle, I will tell you my situation. If it is a problem for you then I respect it. And, I hope that Richard respects my situation as he does not know me at all. There is a thread here somewhere where I explained a little bit of it. But I will not defend myself here. I have nothing to be ashamed of. All my loans are paid on time and all underlying assets are well managed. You know the expression, The proof is in the pudding.
This is an interesting discussion. For me, the lo doc, no doc loan is the bigger worry. Imagine, all I have to do is sign a piece of paper that says I earn x amount of money and that I will not have difficulties meeting the repayments. Imagine that!
I have not taken a no doc loan EVER. Never had, never needed to.
It is not my problem that lenders don’t know how to interpret the tax returns (legitimate) in front of them.
I know the thread is not a direct affront on me as a person, Richard. I understand that it was started as a cautionary tale. For one thing, you don’t know me enough to make a value judgment on me as a human being. But when dealing with people, jJust remember that to each case is ALWAYS a backstory.
I always disclose my situation. If a Mortgage Broker ask why, I am happy to divulge more information. There is nothing to hide and I am guided by their expertise. If the broker says no, I fully respect it. Each of us can only do what we are comfortable doing.
There are many scary stories out there. But remember too that there were many legitimate employees out there making a good living until the company comes crashing down. There are risks every where. It all depends on how well we manage the risk. And in so doing, to never, EVER get anyone into trouble deliberately.
Happy day to all.
Thanking you.
AngelHi all,
I've posted a similar topic which relates to fraudulent lending called "Commonwealth Bank (CBA) – serious example of maladministration/fraud – ASIC denies systemic issue" at https://www.propertyinvesting.com/forums/legal-accounting/4348169.
Any feedback on that topic would be greatly appreciated!
Thanks,
Max A
Hmmm…. I think all mortgage brokers have been asked not to disclose the full facts. I had someone call me last week and ask if he could buy a home and claim the FHOG. But his defacto has already received it in QLD. But he said that was in a previous relationship and it wasn't fair he couldn't claim it. Yes, she was going to be on the title and be a borrower on the loan. But he doesn't want to pay stamp duty and miss out on the $7k. Mmmm….needless to say I quoted him the full stamp duty in the loan pack I sent him and I probably won't hear back from him. This isn't the kind of business that I do.
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