Liar loans

Discussion in 'Legal Issues' started by pfbs, 26th Nov, 2017.

Join Australia's most dynamic and respected property investment community
Tags:
Page 2 of 2
  1. Lifeinonemotion

    Lifeinonemotion Member

    Joined:
    29th Sep, 2016
    Posts:
    24
    Location:
    Queensland
    No lender (that I cant think of) has actually implemented it. From a google search, NAB look like they are starting in Feb 2018 and the report says that they are "pioneers", CBA to follow suit some time in 2018 too...unsure about others because they dont show on page one of the search.
     
    Lifeinonemotion, 27th Nov, 2017
    #21
  2. Lemmy a fiver

    Lemmy a fiver Well-Known Member

    Joined:
    25th Dec, 2016
    Posts:
    243
    Location:
    Melbourne

    Not sure why complete honesty on a loan application by myself or others would get you riled up ?

    .....but have a nice day anyway Champ.
     
    Lemmy a fiver, 27th Nov, 2017
    #22
  3. TMNT

    TMNT Well-Known Member

    Joined:
    23rd Jul, 2015
    Posts:
    5,572
    Location:
    Melbourne
    What gave you the idea I was riled up,?
    Just responding to your post. Nothing more or less
     
    TMNT, 27th Nov, 2017
    #23
    TheRayTracer likes this.
  4. Peter_Tersteeg

    Peter_Tersteeg Mortgage Broker Business Member

    Joined:
    18th Jun, 2015
    Posts:
    8,163
    Location:
    03 9877 3000
    The system is in place, but it requires the banks to share their data. The big banks have a huge amount of data on their customers already. By them sharing they don't have as much to gain as their competitors. Hence they haven't been sharing.

    Overall it's been a bit of a hoarding exercise so far.

    That's changing. The government has seen what's going on and they're making it a legal/compliance/whatever requirement that the banks share their info. Over the next year or two there will be a gradual but compulsory roll out.

    All lenders and other credit providers will have access to a huge amount of info on you. Omitting a credit card or not disclosing other debits will be a thing of the past.
     
    Peter_Tersteeg, 27th Nov, 2017
    #24
  5. Simon Hampel

    Simon Hampel Founder Staff Member

    Joined:
    3rd Jun, 2015
    Posts:
    12,412
    Location:
    Sydney
    There was an article about Liar Loans on Lifehacker a couple of weeks back - How 'Liar Loans' Undermine Sound Lending Practices

    ...

    The UBS study found that a third of Australian mortgage borrowers reported being “not factual or accurate” in their mortgage applications. Being “not accurate” is not the same thing as being a “liar”. However, we need to be aware and pro-active to avoid poor standards and practices.

    They further estimate that there is roughly US$500 billion ($657.95 billion) worth of factually inaccurate mortgages on banks’ books in Australia. This is worrying, because it could mean that borrowers are taking on bigger debts than they can actually afford, falling into financial stress or even losing their homes.​

    The term "liar loans" specifically refers to lo-doc loans in the US (ie where you don't have to prove serviceability), rather than people who lie on their full-doc loans - but I guess the net outcome is the same.
     
    Simon Hampel, 28th Nov, 2017
    #25
  6. Trainee

    Trainee Well-Known Member

    Joined:
    24th May, 2017
    Posts:
    10,327
    Location:
    Australia
    Depends what the lie is. Claiming income when you have none? Or not claiming a credit card you have? Underestimating living expenses?
     
    Trainee, 28th Nov, 2017
    #26
  7. Simon Hampel

    Simon Hampel Founder Staff Member

    Joined:
    3rd Jun, 2015
    Posts:
    12,412
    Location:
    Sydney
    All amounts to the same thing. You either claim too much income or declare too little expenses - net result is that your actual ability to service the debt is not what you are stating on the loan.
     
    Simon Hampel, 28th Nov, 2017
    #27
  8. radson

    radson Well-Known Member

    Joined:
    4th Jul, 2015
    Posts:
    1,563
    Location:
    Upper Blue Mountains
    radson, 28th Nov, 2017
    #28
    Perthguy, Simon Hampel and Propertunity like this.
  9. Perthguy

    Perthguy Well-Known Member

    Joined:
    22nd Jun, 2015
    Posts:
    11,767
    Location:
    Perth
    Interesting article @radson. The doom and gloom brigade would not like it. You may recall that I have been arguing that it is unbalanced to look at household debt without considering household savings. The article raises the same point:

    The record-household-debt story is more common than bushfire warnings. Less common is the other half of the RBA chart pack graph – because rates are so low, the servicing that debt is the easiest it's been in 14 years.

    And what's never seen is the net household debt story. Our net debt – loans minus cash and other financial assets not including equities or superannuation - actually peaked in 2006, retreated a bit and has been relatively flat for a decade.    ​

    [​IMG]

    This tells a much more complete story but it's hard to explain to someone who doesn't understand the concept of NET. ;)
     
    Perthguy, 28th Nov, 2017
    #29
    radson likes this.
Page 2 of 2
Buy Property Interstate WITHOUT Buyers Agents!

Buy Property Interstate WITHOUT Dropping $15k On Buyers Agents Each Time! Helping People Achieve PASSIVE INCOME Using Our Unique Data-Driven System, So You Can Confidently Buy Top 5% Growth & Cashflow Property, Anywhere In Australia