Westpac plans to 'dump' risky property investors as rates rise and returns fall

If fraud I doubt the insurance will pay out, but then again they do their own checks so who knows.

 

Same guy who claims 40% of finance applications are rejected? Yeah, not sure I'd subscribe to anything he puts out after that... #fakenews

You can talk APRA regulation until the cows come home but the same dosen't apply to his "data panel" of 40,000 opinions

 

Ask Trump.....fake news perhaps......

On a serious note, I have seen no real evidence........

 

Lot of naivety on here, if a crash happens (not saying it will) banks can and will call in loans as they wiah.
Happened wholesale in ireland , across the board not just it distressed or high risk. I expirenced it
If a downturn comes people can’t get out fast enough, humans are bigger sheep than sheep themselves and that includes the banks

 

6 properties could be worth less than 1 or 2 depending on the location and purchase price so I’m not sure it’s impossle for someone to have 6 with 1 lender at 80% and have been honest with their applications.

 

They can but don’t need to use fraud. Banks have a clause in all contracts that lets them review your position and reduce or cancel the limits they offer. I wrote about it here with an example from NAB’s standard mortgage T&C’s: Assessment of Existing Lending

 

I tried to watch the old guy in his blog video but fell asleep halfway.

Still no sightings of "the letter"?

 

The banks will pull the plug on developers and individuals building houses in stage payments , if a crash happens (again I’m not saying it will ) that will happen wholesale

I was involved in a development all payments were made , strong asset base securing the loan , banks pulled the plug mid way thru

People don’t realise what can and will happen , we have had almost uninterrupted economic growth for a generation, to think the banks can’t or won’t pull your loans is extremely naieve

 

We have spoken at length on this forum of what happens to developers, but the banks wont be calling in normal resi loans that are paid on time, but if the pressure is on and your defaulting and the RC is a past memory, they will sell you up, but they are not like they were decades ago.

If something happened where many banks were in such strife, then were all stuffed anyway. And no one will be there to pass the parcel too.

So people may as well operate withing the conditions we all have at the time, no point heading for the hills/dug out yet.

 

I would have thought that in a worse case scenario where housing values dropped significantly that the banks could make you increase your deposit to bring your LVR to 80% or something like that rather than cancelling your contract if repayments are up to date. Though I guess its the same thing, most people wouldnt have the cash to top up the LVR so the letter might then be step 2?

 

Seen the article but super hard to digest..

And the interesting bit is Westpac didn't bother commenting at all..

And was it one letter or one of many letters?

Possibly just one particular client but who knows..

Big four banks are pillars of our nation and form major chunk of the economy. Any effort to protect company owned by shareholders and safeguard banking system should be respected (of-course need to be fair to customers at same time).

Positivity is the key to success!!!

Cheers,

 

According to a report by Robert Gottliebsen in the Australian today , part of the problem is some investors have been using multiple lenders and not informing their other lenders about loans , and in coming weeks banks will be sharing a lot more data.
From next July it will cover the entire financial system.
And the banks might discover they have been hoodwinked by borrowers using multiple banks.

 

"Addicted to debt"

 

Apparently Westpac was audited and they found only 1 out of 10 lending controls were effective.

FOI fail: Why didn't APRA tell anyone about dodgy mortgages? - MacroBusiness

 

Meh. APRA is not required to disclose every interaction with the bank. I can only suspect on a yearly basis they find thousands of breaches. Their job is to find these breaches and request remediation.

If anything it shows APRA is doing its job well. Add to that a stable, well capitalised system etc etc.

Remember. They are not a media agency, they are not a consumer protection agency and they are not the Treasury. APRA is responsible for financial system stability. Full stop.

 

“
An explosive, previously confidential memorandum to the Westpac board last year shows how the nation’s second-largest mortgage lender scrambled to respond to poor results from the Australian Prudential Regulation Authority’s “targeted review” of borrower income and expense verification.

Westpac also fretted it had breached trust with the regulator, after APRA chairman Wayne Byres personally berated the bank as being a “significant outlier” with respect to high risk lending.
“
“The PwC report has disturbed APRA and there is no easy answer to rebuilding trust with them in this area,” the general manager of portfolio integrity of Westpac’s consumer bank, David Watts, told the board’s risk and compliance committee in the document dated July 29.

 

That’s not the point. The real issue is, how can Westpac let these liar borrowers borrow money?

Unfortunately the Australian property market has turned into an Institutionalized Ponzi Scheme.

Now that the regulator is catching up, the honest players are being penalised

 

Maybe it was bit of fanciful reporting , but Westpac have been mentioned a couple for times of writing I/O loans based on the ability to only pay the IO component and never really closely looked at a customers ability to also pay P&I, once the loan reverted back.

 

So can we chalk this one down to fake news?