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Validity of paperwork given to banks

Discussion in 'Property Finance' started by ej89, 3rd Aug, 2015.

  1. ej89

    ej89 Well-Known Member

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    To the brokers on the forum..

    I recently found out that there are brokers out there that "make things happen" in that they will fudge payslips to give to banks e.g. instead of being self employed they got payslips from an unrelated company. My question is how the heck do they get away with it? In what detail do the banks look into this stuff? What are the consequences for the broker and the person applying for the loan? Just wondering because someone I know has had loans come through I would never expect them to get..
     
  2. albanga

    albanga Well-Known Member

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    Ummm this is fraud and they will go to jail if caught. Its like robbing a bank and getting away with it, all well and good until you rob another one jump the counter and smack your head (thanks two hands).
     
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  3. ej89

    ej89 Well-Known Member

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    So they'll be picking up soap if caught then haha
     
  4. Jess Peletier

    Jess Peletier Mortgage Broker - Australia Wide Business Member

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    I think it happens quite a lot - I had a friend who came to me for a completely straight forward loan, didn't service, and went to another broker and serviced with ANZ, - one of the more conservative lenders.

    Either he didn't give me all the info, or the other broker did some major fiddling.
     
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  5. Peter_Tersteeg

    Peter_Tersteeg Finance broker and strategist Business Member

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    There's periodically stories about people in finance being de-registered, answering criminal charges, etc for these sorts of things.

    Faking a payslip isn't really that hard if you understand the numbers that go onto it, and brokers are generally required to have a good understanding of those numbers. We also get access to plenty of templates.

    I can also understand why some brokers might do it. You'd be surprised how much pressure we get to, "Just make it happen". Saying no to people can be very difficult. In some cases the client might be genuinely better off if the loan gets approved. Often we'll tell people they can afford $500k and they spend $700k and expect us to magically make it work. There's also plenty of people in finance who simply want to get paid.

    Objectively speaking, it's an incredibly stupid thing to do. I've put a decade into building my business. It's worth more than some of the properties my clients purchase, not to mention it's got great cash flow! One little fraud conviction makes that all worthless and then there's the legal consequences.

    The truly sad part is that those that do this give the investigators the evidence on a silver platter. Most people wouldn't have the knowledge to beat an electronic forensics investigation and creating false paperwork does leave a paper trail for those willing to look hard enough.

    Eventually most do get discovered as well. If you start writing fraudulent loans, eventually some of these loans go into default. Defaulting loans get investigated and if the loan should never have been approved, eventually that trail leads back to the originator.

    The banks fraud detection isn't absolute, but it is quite good. There's a lot of checks and balances in there. That bar code on the side of your bank statements is directly related to the financial information on that account. Standard accounting packages have known payslip formats which are automatically verified and your ATO notices use special fonts. Your bank statements are cross referenced to your payslips and employer details.

    Legalities and ethics aside, it's a stupid path to take. Eventually it gets discovered and the consequences are way too high. I think the same could be said for most criminal acts.
     
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  6. jaybean

    jaybean Well-Known Member

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    Sometimes the banks are just a bit lazy themselves. I got a loan with AMP recently and my broker commented on how weird it was that they only needed a tenancy agreement and not proof of regular payments / rental statement. He said how easy it would be for people to just do up a tenancy agreement between family or friends without actually getting paid. It should be no harder for an applicant to provide a rental statement instead of the rental agreement instead.
     
  7. Steven Ryan

    Steven Ryan Mortgage Broker Business Plus Member

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    I believe it happens pretty regularly. The concerning part is that some brokers seem to do this stuff by default and have a reputation as the "go to" person when in need.

    In a taxi back from a house-hunting trip to Bris a few weeks ago I was chatting to the driver who was quick to ask if I "Do dodgy stuff for clients?". I explained that it's illegal, so no. Turns our he, and a pile of his friends (mostly drivers) report almost no earnings and have a broker who forges documents to get them finance all the time.

    Chatting to a coffee shop owner a few months prior, she said she has a broker who only works with people of their ethnicity and puts loans through for everyone who asks and charges extra for the forgeries. Lots of them run cash businesses.
     
  8. Peter_Tersteeg

    Peter_Tersteeg Finance broker and strategist Business Member

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    There are legitimate tenancies out there operating on a cash basis with a valid lease in place, I can understand how this is acceptable although not ideal. It probably raises some flags, but not enough in itself to become a problem. Lenders do have stats on what are reasonable rental yields for a location. Make up a lease agreement for too much and it will likely be discovered.

    I did once deal with a driver for a luxury car service. Drivers were paid in cash, it was almost impossible to verify their income. I was asked for an example of what a payslip looks like so they could replicate it. That was the last time I spoke to her.
     
  9. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    Please report of these brokers to the fraud divisions of the relevant banks - if you know which lender.

    It does happen a lot and some applicants know it happens but think they can just blame the broker if they get caught - they will be blaming each other I guess.
     
  10. Jamie Moore

    Jamie Moore MORTGAGE BROKER - AUSTRALIA WIDE Business Member

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    It happens - and it's not just cowboy brokers committing blatant fraud, there are bankers that will bend the rules too.

    ASIC and the introduction of the NCCP would have curbed some of the behaviour - but it wouldn't have eliminated it completely.

    Cheers

    Jamie
     
  11. Brian84

    Brian84 Well-Known Member

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    Good movie. The bank robbery was filmed at the bank near my house.
     
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  12. ej89

    ej89 Well-Known Member

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    hmmm. Seems like it's quite common then.. Can't say I'd ever take part. I'm the type of bloke who wouldn't sleep at night lol
     
  13. Marty McDonald

    Marty McDonald Mortgage broker Business Member

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    I'm not sure it that's common. Saying that I have had a few people try it on over the years supplying me false docs. One made it through my checks. The lender picked up that the ATO assessment notice was a forgery. Bloody scary stuff. Cops were called. I now pay a bit more attention to what I'm looking at and luckily the lender took my word for it that I wasn't involved which of course I wasn't.

    Its hard sometimes because the job is part sales part credit assessor. Trust but verify!
     
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  14. Paul@PFI

    Paul@PFI Tax Accounting + SMSF Business Member

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    Dangerous for any broker to do this as they wont ever work in industry again and they always seem to repeat the behaviour. But all industries have rogues....
     
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  15. Peter_Tersteeg

    Peter_Tersteeg Finance broker and strategist Business Member

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    Hardly common, in fact I'd say it's quite rare these days. Between the events of the GFC in 2008 and NCCP in 2011, most of the dodgy brokers have left the industry or been forced out.

    Brokers being deregistered or convicted for various offices tend to get quickly published in industry circles so we're aware of it. I suspect similar fraud does occur internally to the banks, the really serious stuff ends up in the newspapers, the smaller stuff I suspect gets dealt with internally.
     
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  16. ej89

    ej89 Well-Known Member

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    From a brokering perspective, how the heck does someone have 200 properties in 10 years? Dodgy brokering involved?
     
  17. Peter_Tersteeg

    Peter_Tersteeg Finance broker and strategist Business Member

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    You either achieve this above board, or it's an inside job.
     
  18. Steven Ryan

    Steven Ryan Mortgage Broker Business Plus Member

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    Certainly possible with strong, increasing income and low purchase prices. It would work in ones' favour just as much to have a very good relationship directly with a lender, who has a very good relationship with their valuer.

    e.g.
    1. Buy CF+ property (which increases serviceability) under value
    2. Get early access and do minor reno before settlement
    3. Settle and reval immediately
    4. Pull out deposit for next one
    5. Repeat
    Not as easy in today's environment post-APRA changes.
     
  19. albanga

    albanga Well-Known Member

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    Are you referring to someone like say Steve McKnight?
    If so then this is really just a time gone by, this was the days of hugely CF+ regional properties (Ballarat specifically for him) in a different lending environment but more so to that it was a heck of a lot of vendor financing.
     
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  20. ej89

    ej89 Well-Known Member

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    Seems like it'd be easier done on 95% lends right? That's gone now haha