Conflicting info from three different mortgage brokers

Guys

I have a question regarding lenders requesting bank statements and checking my expenses, is this a compulsory thing?

I asked three different brokers, and two said, NO, banks don't request bank statements, just proof of income i.e. pay slips; whilst another broker that I trust a lot because he has been helping me for almost 20 years, he said, of course banks will ask for bank statements, and will check every major, recurring, and major one-off expense.

Which one is true? Or can both be true with some exceptions?

 

From a compliance perspective we get all statements regardless of whether the banks need them or not. What have you got to hide?

Most banks do require statements. And most will go through them pretty thoroughly.

 

I have applied three mortgages in the past and provided bank statements, and plenty other details.

I was just being ridiculed by another family member (with his two mortgage brokers he introduced to me), and he said, HELL NO, why would you do that?

It is not about something to hide, but you always want to tidy up your house before inviting guest, don't you? So it's quite a hassle to ensure I have an extremely tidy 3 months bank statements.

 

Depends on the lender and scenario. Some lenders don't need it. Some do.

Were moving to models where payslips wont even be required either. ANZ have a refi process for this, and CBA do too (releasing shortly).

Give it another year or two and most wont need it.

Overall there is higher quality information on your affordability of meeting repayments than bank statements themselves for certain situations. E.g. your repayment histories on existing loans.

 

Wait wait, so you are in the 'no bank statements needed' camp?

And you're saying that the direction is that the banks will less likely to need bank statements in the future? It is against the conventional wisdom especially with rising interest rates... at least for me.

Are you sure?

 

What the bank may or may not need to see and what the broker is absolutely required to see and record for compliance purposes can be two different things . If you are seeking to avoid providing what brokers are asking, go to a branch. Branch land doesn't have to meet the compliance standards that brokers do. But be aware that you may need to do all the legwork across multiple branches of multiple lenders to find that outcome you seek..... so it's actually easier to just give the broker what they need ...

 

Redom, so this is the wagyu and shiraz idea put into practice?

 

Lenders may not need them but as brokers we need it for compliance.

Banks put the ownest back on the brokers to be doing these diligence rather then the bank.

This is essentially to speed up the process.

 

Banks are approving loans in an hour nowadays via retail channels, and this will flow through to broker channels more and more over coming years. By mid 2020's, this will be uniform across lenders largely and everyone will evolve to much richer information sets when assessing loan capacities.

Not long ago banks were asking for bank statements to decide whether to get a loan, spending 3 days filtering through it and double checking whether they've captured their ubereats order correctly when someone earns $500k and can pay the loan out in a year if they wanted to. The above is what happens governments come up with hair brain ideas. Essentially the by-product of having random lawyers who have no idea about credit flow make economy wide decisions. Its almost entirely a function of government bodies that don't know what they're doing getting involved in something that really isn't their business.

Thankfully, soon enough, this doesn't pass the cost/benefit test and we get out of the way and let innovation actually take place. Productivity rises and Australians have better living standards as a result.

Its just the continual evolution of banking. Speaking to my father in law about his process for getting a loan in the early 1990s was very different to today!

 

So, can we tell our mortgage brokers, "if the banks don't need it, I don't need to provide."

I don't know, I have been always under the impression (the past 20 years) that the bank the one that actually needs it.

So it is true that I am duped.

At least, the mortgage broker should explain this that it is not the bank, but rather the mortgage broker the one who needs it. Then it is up to the potential borrower to decide whether they want to go with this broker or not.

 

Most of us just have a broker we trust.

 

True.

But a broker we need when we started our mortgage journey, may not be the best broker for us in the next stage of our mortgage journey.

Also, people change too.

I feel sometimes my existing broker does not act in my best interest.

 

Because.......?

 

Think you need you read my post again.

 

'Ownest' sounds like a word datto might use to describe himself.

Is the broker compliance to check paperwork for the lender audited regularly, or only when the borrower defaults?

 

It's not a big deal - click a link, get statements emailed. I really don't see the issue - believe me, we've seen it ALL before...

And duped is a very strong word. I would not say you're duped.

 

Most banks do not need it - however the broker needs it for their internal compliance as the broker must declare your correct expenses to the bank. We check for any recurring payments that you have not mentioned I.e you may have a car loan that isn’t declared (we now also run a credit check). Important to know this as the bank will likely run a credit check and if they find undeclared expenses and debts it leads to more questions and slows down YOUR approval.

So you can not give the broker your statements if you like but don’t be surprised if the broker doesn’t want to work with you.

 

Can be random compliance checks. Better to find dodgy brokers early.

 

Most banks ask for some form of spending statements, but some are significantly more relaxed about it. It's generlly best practice for brokers to get statements, but we wouldn't forward these to the lender unless it was also required by the lender.

From a compliance perspective, it's not for the banks, it's for our license holders and head groups. Even if a broker holds their own license we're now subject to regular audits from our head groups. Compliance failure is reported and can have very significant consiquences for the broker.

I hold my own license and my head group still audits a random sample of files every year. For the most part it's just a check that all the boxes are ticked, notes are taken and the files are held.

Part of compliance is demonstrating that we are acting in the clients best interests. It's very unlikely that a broker is deliberately trying to take advantage of a client these days. The problem is that the customers perception of best interest and the brokers definition may differ. Also worth noting that the nor their employees have no obligation to act in the clients best insterests.



Within the next year or so, your credit reports will also include very specific details about how you spend your money so most bank statements won't be needed. Whilst it's not easy to get authority to directly access peoples credit reports, it is frightening how much information is becoming available to financial institutions.

 

Not related to this particular bank statements thing, but in the way of structuring the loans, and sometimes the strategy.