Great News if you are Stuck

i thought the NCCP doesn't apply if not regulated but responsible lending still applies?

 

I'm presuming that they should sign off on something that is real and genuine Terry, although I do see where it can be miss used.

It could be handy in situations where the serviceability is definitely there but there are no PAYG documents to verify.

I'm presuming my account knows what I can comfortably service even though I actually don't have a job. Is that the way it supposed to work Terry or did I miss something here?

MTR who do you use to get this done through? RAMS directly?

 

Accountants are not licenced to give credit advice (unless they hold an ACL) so they would have no basis to know whether a person could service a loan or not. With these declarations they are just confirming an income. If the income is correct then there would generally be no issues, but if they are exaggerating it then they are exposing themselves to risk - from a criminal and a civil point of view.

 

Terry that's crazy my accountant and I review everything including my current and future projects so we can strategise with regards to tax.

The reality is we once had lo doc and no doc and that was an absolute rort with brokers often telling their clients what they need to declare to service loans and it was common knowledge in the industry and this was happening on a massive scale. I know because I used them and most of my investor friends did the same. I only recall one case that went to court.

Regardless, I agree should not be overstating income, but the reality is I am sure most do and I am sure most wont be in court either, because evidence shows this. Lawyers are usually the only winners.

MTR

 

What do you mean it is crazy? Misrepresenting income to obtain a financial advantage is a criminal act. Just because you don't get caught doesn't mean there is no risk.

If you are not overstating income then you may be fine, but your accountant is still talking a risk. Not all accountants would sign off on these, and that is to protect themselves.

There are plenty out there that will - I once went to a broker's office and there was an accountant visiting. He was signing off on low doc declarations based on a statutory declaration by the clients of what there incomes where!

 

I think you have misconstrued what I have stated.

Anyway, can we please get back to the topic.

I started this thread to help investors who may be stuck, its up to everyone to do their own homework and make their own choices. I am not going to preach what investors should do.

MTR

 

I think PC has quite a few 'criminals' among its members I suspect

 

This all stemmed from your comment about accountants being off the hook. My legal opinion is that this is not correct.

But this doesn't mean these products are bad. They are great and I would even use one myself.

 

Exactly..
And as a CPA or CA under the bodies guidelines and ethics doing something such as exaggerating a declaration for the purposes of obtaining finance would be a breach of the bodies charter and the accountant could potentially loose their membership. Such declarations that are fraudulent would not be made by a "fit and proper person". So even if there were no ramifications from the lender or if the accountant was "off the hook" from that angle, they are still very much accountable to their professional body..

 

Not that long ago I questioned a low-doc income declaration from an accountant, my gut feel was the profit numbers were inflated (after assessing the outstanding non-deductible debt)

They later produced a cash-flow estimate which was some 50% lower. Having read the fine print on the declaration, the accountants are definitely not off the hook with these dec statements.

 

yes RAMS direct

 

I don't know so much, its a catch 22, ...... this is an example of a typical disclaimer in bold
... and why???

Some accountants are unwilling to write a letter confirming the particulars of your situation. Normally this is because they are concerned about potential legal action.

Whilst obviously no accountant will sign a letter confirming something that is not true, it is unreasonable for an accountant to refuse to sign a letter that is true.

Banks will normally accept a disclaimer being added to the bottom of the lender. The wording of the disclaimer can be however the accountant sees fit. For exmaple:

“This information has been confirmed via independent enquiries with the above mentioned client. Whilst we believe the information to be true to the best of our knowledge, we accept no liability regarding the accuracy of this information or any loss incurred by any person or company who relies upon the information in this letter.”

 

Thanks for posting. But this doesn't really mean much.

It is like those people on the forum who give financial advice and then give the disclaimer 'this is not advice' - it doesn't mean much.

Also - what if the accountant hasn't confirmed anything via independent enquiries?

 

It does to me and if I was an accountant I would also not be signing off on any lo doc product/declaration of income unless a disclaimer similar to above was in place for the exact reason mentioned above.
This was sourced from mortgage broker site.

MTR

 

But it does
I didn't know about it before this post.
It now tells me that RAMS have a product that I may want to check out if I'm doing a development.

It's a piece of information to look further into if the need arises, another tool.

All the details etc can be worked out when and if they are required, for someone like me, all I need to know is that there is a loan product worth more looking into should I ever need it.

I don't need intricate details, that's what accountants and mortgage brokers are for.

 

Yes the product is good and worth looking into - I am not against these sorts of things. Just pointing out some legal issues which could effect people signing off these.

 

I am not sure about now, but a long long time ago this sort of thing was required when starting off or new business coming on board etc and accountant would put in a statement of expected/projected income, I dare say it is probably the same now, as pointed out elsewhere, if it was PAYG earnings you would go full doc for lower rate, but without reading the actual docs, who knows.

Nothing wrong with that, it is meant to fit certain users, not be mainstream.

@Taku Ekanayake These l;oans normally are for people who have or doing some sort of business, if you were doing Uber and getting 50k and PAYG and getting 50k and but mainstream lenders not interested in your business income or have some other issue, and you need funds to do something like what MTR is doing, then this is a great product it seems.

 

Xenia I was struggling to source finance for my 4 townhouse development in Thomastown ...until another developer on PC told me about this product.

At the time this person had been using this product even though they could access full doc as this was far easier option, no jumping hoops.

I will be using RAMS for my Croydon development

MTR

 

I think it is perfect fit for what your doing, do they count the potential return from your sales ?

After I got PAYG income, I found it no real problem usually for full doc, except when they decided to do a full check on all personal accounts on one loan, that was a ******* pain in the rear to say the least, it probably soaked up over 8 hrs extra of my time. Or when they have lost docs, then had to re do them all.....

 

investors buying resi in their trust may also want to investigate this product.
If your Accountant signs off on income, no other information is required other than bank statements.

It's another tool investors may have up your sleeve if servicing debt becomes a stumbling block. There are other Lo doc providers but I believe RAMS is the front runner IMO.

MTR