Lenders ignoring their own policies

Have seen a few posts on here recently about borrowers who have gone to a bank direct and they have offered to take their loan(s) across from a competitor despite the loan not complying with current serviceability policies.

Any advice on what types of deals or lenders these are? I'm guessing PPOR P+I.

Do you think this might continue into the future given many of us are now 'tapped out' post APRA reforms?

 

They are potentially breaching the NCCP by doing this.

CBA will do it for clients on high incomes and large loan sizes - prob $200k income and $2mil in loans as a guide.

 

And there are also the bank staff committing frauds - some have the ability to sign off on an approval.

 

This is where I put my bet on, more than legitimate internal approvals based on all information being provided. I've seen some shockers where the clients can barely afford the loans they've received based on actual repayments, not stress tested rates. This is generally the exception than the rule of course - the majority of people out there are trying to do the right than, than dodgying up applications to reach their bonuses.

 

I think this is happening a bit more often nowadays, i.e. servicing that doesn't work that magically does later with the same metrics/calculators & a bank direct approach.

Not sure whats going on as brokers don't have coverage over direct channel, but i'd suspect there may be ways for direct channels to circumnavigate some things (not sure of ehtics/legality). From my recent experience, haven't seen credit policy being stretch this way with CBA but with a couple others that can make 1+1=3 (similar experiences to rolf).

 

Actually I think it used to happen a lot more often than it does today, but it still does happen today.

* In the past I've had a number of personal bankers bragging that they had the authority to sign off loans themselves without credit review. That said I've also seen a few PBs get sacked because they abused that authority. This occurred a lot more prior to the GFC and licensing than it does today.

* I've seen plenty of cases where I felt that it wouldn't be possible to get the loan, only to have it approved in a branch. I suspect a lot of information doesn't get properly disclosed (possibly by the borrower, or possibly by the banker).

This did reduce with credit licensing and responsible lending in 2011 and again in the last few years with APRA over site, but there are still plenty of cases of 'interesting' lending decisions out there. Hopefully with the Banking Royal Commission this will be put down further.

 

As an example i submitted a pre-approval with a lender and the max was about $1.1mil. Client's mate said his bank manager could get a higher amount with same bank so client went to see him. Banker asked client to get me to put in writing that I will let banker take over the application and he soon got pre-app for about $2.6mil and bought at auction and the bank gave full approval and funded it.

 

That's a huge difference!!