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Broker: Lo-doc loans to blame for repossessions

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Australian Broker | 13 Jul 2012, 07:00 AM Agree 0
A leading broker is blaming the pre-GFC popularity of lo-doc loans for current record-high repossession rates in WA
  • Gary Perth | 13 Jul 2012, 11:08 AM Agree 0
    I doubt that Lo Doc loans are the major cause of repossessions, I would imagine that the 95% plus capped LMI loans on over priced properties settled in 2007 and 2008 may have a fair share of that pie.
    Most Lo Doc loans had LVRs in a position where a 20% drop in prices would have not forced a repossession. The repossession is usually due to extremely poor decision making by a LO Doc borrower, not the loan it self. or,The common reason I feel is couples seperating, pregancy or job losses in the 95% plus borrower group who lost any equity when housing prices dropped in 2009, 2010.
  • Dean | 13 Jul 2012, 12:03 PM Agree 0
    The LVR has nothing to do with it. EQUITY DOESN'T SERVICE DEBT - Income does and there is little doubt that the vast majority of low doc borrowers made false or at least very ry "optimistic" declarations to get the loan in the first place....And the banks encouraged it by applying little or no verification and discounted pricing for these higher risk loan and now we are seeing the results.
  • SteveOz | 13 Jul 2012, 04:10 PM Agree 0
    Is this real evidence or anecdotal evidence?
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