Don't confuse low-docs with lie-docs
By
Ben Abbott
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30/09/2011 7:00:00 AM
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4
comments
There has been no significant change to the ability of brokers to write genuine low-docs under NCCP, which has only stamped out more dubious forms of lending, according to Select Finance director Bruce Gibbons.
Speaking with Australian BrokerNews, Gibbons, who holds accreditations with almost 80 lenders,said that the NCCP has become the new scapegoat for blame for all things that hinder brokers earning an income.
"This is just like the Privacy Act become the excuse in the 90’s for institutions not providing timely information back to enquirers," Gibbons said. "Yet the NCCP has nothing within its legislation that restricts or prohibits low-doc lending. What it did stamp out, was no-doc, lie-doc and sceptical doc."
Gibbons said the basic responsibilities and obligations of brokers have not changed - only the threat of "fines and prison".
"There are still a myriad of lenders - mainstream, non-bank and the likes of superannuation funds - that are still actively lending low-doc type applications, and the demand has not eased," he said.
"What has happened, is the larger lenders have tightened up their criteria. There is now a more pressing requirement for elements such as operating account bank statements, MYOB, BAS returns, interims, accountants sign-off. There are no more “short-cuts”. If the borrower can’t produce any of this, it maybe should be then a 'sceptical-doc' application," he said.
Gibbons said as the important obligations have not changed under NCCP, the legislation should not deter low-doc lending.
"Brokers just need to make complete and proper enquiries - as they should always have been doing - from the financial information available at the time, and submit the deal to a lender where it matches," he said. "If the information is concerningly lacking, vague, ambiguous, evasive, dubious or unconvincing, then the loan should not be written," he emphasised.
Gibbons said basic obligations included not 'setting up' the client, not committing the client to debt they can't afford, making reasonable enquiries as to the person's ability to meet repayments, not making false declarations to mislead and deceive, and the requirement for a commercial benefit.
Related stories:
Low-docs 'not dead' under NCCP: MKM Capital
Market players 'tarnishing' low-docs: Pepper
Latest Comments
Total:
4
comment(s)
Countrybroker on
30 Sep 2011 10:50 AM
This fellow is spot on. You can write genuine Lo Doc deal with the lenders most of whom do not load the rate . I have used these types of loan since the NCCP started and if you are diligent , keep good notes, and do good checks and diligence , these loans are fine if you foloow the rules , Where Brokers will get into REAL TROUBLE is if they try and do deals that should not be done and the client are encouraged to oerhaps bend the facts , never did work, never will work.
Mike on
30 Sep 2011 11:24 AM
I disagree! Of course low doc lending has not changed in essence with responsibilities etc. However lenders have withdrawn and/or modified low doc products since the NCCP, and that has changed the field dramatically.
Alert on
30 Sep 2011 08:35 PM
ASIC,at this week's Credit Law conference, indicated no product should be badged "low doc". Products should be genuine and decisions about documentary evidence to support the application should be based on the applicant's position. It is a risk decision, not a product feature. The EDR schemes are rejecting business low/no docs as being maladministration so be wary of low/no doc products
Ozboy on
06 Oct 2011 10:27 AM
If Alert is right then ASIC must be having a very hard and long look at RAMS that is their whole business/advertising model..low docs.