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Regulators crack down on interest-only loans

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Julia Corderoy | 10 Dec 2014, 08:32 AM Agree 0
Regulators have set their sights on interest-only loans after they reached a new high in the September quarter
  • marty | 10 Dec 2014, 08:59 AM Agree 0
    Oh ohh
  • Vic Regional Broker | 10 Dec 2014, 09:07 AM Agree 0
    Most interest only loans I do are for construction that immediately convert to P & I.

    I also have some requests for interest only for tax driven housing investment or when the client is looking to "bridge". Owner occupiers are now fixing but on a P & I Basis.

    Really, these types inquiries are just an exercise in spending tax payers funds. APRA should already know what is going on, and as for ASIC, who knows?
  • marty | 10 Dec 2014, 09:21 AM Agree 0
    @ Vic Regional Broker did you read the article? A lot of people are going IO. 42% of all new loans according to APRA figures. Maybe it's a Sydney thing.
  • SIDBROKER | 10 Dec 2014, 09:24 AM Agree 0
    How many people who work for ASIC have interest only loans?
  • Marko | 10 Dec 2014, 09:28 AM Agree 0
    Actually VRB, there is considerable evidence that interest only loans for owner occupiers have increased significantly.

    Of course APRA and ASIC know what is going on. That is not the point of this exercise. APRA and the RBA have frequently jawboned about their concerns with investor lending and the impact that is having on the housing market in Sydney and Melbourne. The majors in particular are highly exposed to the performance of the housing markets across Australia. Following the publishing of the Murray enquiry these "reviews" are one of the tools that will be used by regulators to dampen investor lending and housing lending in general. Make it harder to get a loan = dampen house price growth.

    Any lender who follows the responsible lending requirements of the NCCP will have no problem.
  • When I grow up........... | 10 Dec 2014, 09:38 AM Agree 0
    It's horses for courses. Bad with money need hand holding and big stick to keep on track go P+I. Excellent with money always pay credit cards off in full, offset accounts flush with cash go I/O. Are your clients adult enough to be able to pay off their own loans without someone forcing them to do it. Mine are. We don't need more nannies. Perhaps we could have clients pass an exam to show that they can be a grown up with money then they can get their I/O licence. My son got his pen licence in year 3 perhaps they could add I/O licence to the school curriculum.
  • Rebecca A Mitchell | 10 Dec 2014, 09:39 AM Agree 0
    Interest Only loans have increased? Have they stopped to think that it could be as a result of more investors in the market? What investor has a p & i loan these days?
  • Denise Brailey BFCSA (Inc) | 10 Dec 2014, 09:49 AM Agree 0
    The moment of truth is bubbling (at last) to the surface. BFCSA has been gathering victims of unaffordable loans together for years and complaining to three Chairmen of ASIC re these Interest Only 30 year loans sold to pensioner and low income families. BFCSA have, with assistance from an economist and editor, been explaining the impact for the banking sector to four Inquiries this year. ASIC read my February report and evidence in chief in Senate Inquiry into ASIC. Medcraft in denial. Now after Sept figures they claim they want to give surveillance next year? Where is the Consumer Protection? ASIC is conflicted in protecting big end of town with the interests of Mums and Dads left in a closed file - for years. BFCSA subs to Murray Fawcett and recently Dastyari explain in detail the sellers of product are not to blame. Why is the Senate agreeing to all these Inquiries and even the Treasurer, if there is no problem. Its massive. The Engineers of these dastardly products marketed to ARIPs by Lenders (to asset rich income poor people with own home no debt) was a lender created marketing concept with spiel attached to the FP industry. Its the PRODUCT that is toxic and intentionally so. Why was this not reported/investigated by the so called peak industry bodies? In their evidence they also denied and fell into line with ASIC. Remember they all blamed the brokers and planners. I warned you all. Read the transcript. Why was it a grass roots consumer body that had to do 15 years work on this Lender tragedy to ordinary Australians? Yes these were supposed to be a facility (aka old 12 mth bridging loan) for commercial loans and why you Marty and others had no idea what was being sold. Figure is higher than 42%. All loans unverified. Sellers did not approve loans - lenders had duty to reject. Its called greed and profits and its called sub prime lending - or slime lending if you prefer. Houston we have a problem. Now ASIC has been dragged screaming and kicking into the Consumers. The Government aim now is to contain the information. 2000 files reveal the concept. Consumers will say truth at last! At Christmas spare a thought for the old folk being thrown out into the streets because of 17 big name lenders.
  • Papery | 10 Dec 2014, 10:08 AM Agree 0
    Seems to me once again the regulators are addressing the wrong problem... Property is generally overpriced & becoming unaffordable, especially for FHB. In my mind housing is meant to be a basic right not a luxury.
  • Broker | 10 Dec 2014, 10:11 AM Agree 0
    So this is the business of APRA , ASIC etc. What an absolute joke, are we not allowed to think and make decisions for ourselves any more?
  • Michael | 10 Dec 2014, 10:33 AM Agree 0
    I thought banks were de-regulated years ago. Perhaps we are heading back to the 70's when banks would only lend consumers 3.5 times their average savings over last two years and then they had to get in line waiting to their request come to the top of the pile. What a joke - banks are in the risk taking business and make judgements on loan applications based on verifiable information they are presented with at the time. Of course there will be the occasional bad debt, just like retailers factor in losses from shoplifting. This is just what the cashed up overseas investors would want as it will drive down local competition. If we all stopped doing things just because of what might happen we wouldn't even cross the road, drive a car or get in a plane. Bureaucrats flexing their muscle so they feel important. "Look what I did - gee I'm good".
  • Grahame Hale | 10 Dec 2014, 10:58 AM Agree 0
    I agree there should be a review. I have seen so many spruikers go for interest only loans and seen investors go backwards, hoping for capital appreciation.
    However, I have also had clients ask me for interest only loans for their own home loans trying to get the maximum cash flow.
  • Papery | 10 Dec 2014, 11:05 AM Agree 0
    Yau'll grab ya pitchforks now... Denise is back to slay the monster!
  • Denise Brailey BFCSA (Inc) | 10 Dec 2014, 11:42 AM Agree 0
    Bankers did not take the risk. They took big bonuses and passed on the risk to consumers. That's what caused all these debates and inquiries. How does 100,000 people losing homes benefit the economy? That's the problem Treasury are facing. Homeless Aussies and savings gone! The Bankers have left town to build bigger homes for self. Thirty year Interest Only loans to people who could not afford loans but were given credit cards, LOCs and Buffer Loans to pay payments with Banks money? We have the documents.
  • Peter Heinrich | 10 Dec 2014, 11:43 AM Agree 0
    Denise, what a ramble. I have read it twice but still can't really understand what you are trying to say? That there are more interest only loans could very well be a correlation with the increase in Investor loans. Investors tend to go for IO Loans. Secondly I hope that APRA in particular have a close look at how Brokers relate to lenders as REFERRERS of loans, not APPROVERS of loans. The public have shown that they want to use brokers simply because they have a choice of loans and someone else does the legwork. Th Lenders want them because they now write nearly 50% of loans.
  • Denise Brailey BFCSA (Inc) | 10 Dec 2014, 11:46 AM Agree 0
    Investors were not investors - they were spruiked into bank manufactured product to buy a second home but in four years lost both their home and investment property when buffers ran out. Truth is sometimes embarrassing but IF a car manufacturer created a vehicle where wheels intentionally dropped of in four years (unbeknown to buyer and seller) do we blame the seller or the Engineer and Manufacturer. The villain is the Lender and the grossly unsafe product. Market is then distorted with Bubbles. Read "Bubble Economics" by Soos and Egan
  • Demise Brailey? | 10 Dec 2014, 11:51 AM Agree 0
    What on earth were these incoherent ramblings on about?? Interest only is a product feature, a consumer selectable option. We don't need extremists like Demise deciding for everyone what is permissible. Interest only is a perfectly feasible decision to make, entirely appropriate in certain situations. Heaven help us if the likes of Demise, have any success with their nanny state mentalities... Disappointing that Brokernews permits this broker bashing ambulance chaser to contribute anything to the discussion...
  • Denise Brailey BFCSA (Inc) | 10 Dec 2014, 11:52 AM Agree 0
    Bankers taught the spruikers the financial strategy used to sell product and the marketing tricks of trade. Parliamentarians are listening. Victims have been flooding in the letters of how this was done. It was never ever sold on "general advice" but "specific personal advice." ASIC told Parliament it was "general advice" knowing the victims said no way. This is your industry and yet you were also told porkies........ Of course the bankers engineered this. Look at their bonus paypackets. Then look at the clawbacks. You think sellers are to blame? They believed this was a sound product. APRA and ASIC let it all roll along for years and said nothing. Government now reaching for the Panadol.
  • Demise Brailey? | 10 Dec 2014, 11:58 AM Agree 0
    More nonsensical babble?
  • Rebecca A Mitchell | 10 Dec 2014, 12:01 PM Agree 0
    It seems to me that the meaning of Interest Only loans has been lost here. There is no such product as a "30 year interest only loan" The only product that I know of that is referred to in this sense is a line of credit which is totally different Denise. A lot of the "evergreen line of credits" were done away with when NCCP came into force along with No Doc Loans.
  • Denise Brailey BFCSA (Inc) | 10 Dec 2014, 12:12 PM Agree 0
    Interest Only Low Docs still in play. They are not LOCs
    Latest written two years ago under new NCCP. Plenty of them. Explode after 2-3 years (used to be 4-5). Older citizens mostly. Some spruiked at front door but banker still approved unverified. Serviceablity and sustainability not possible. Its bank approvals that are the problem. Sellers don't approve loans. Sellers not selling these products need to know this is still going on or I could (I wish) retire. No loan applications given at point of signing. Documents altered/doctored inside the bank. Staff told to pump up volume.
  • Denise Brailey BFCSA (Inc) | 10 Dec 2014, 12:25 PM Agree 0
    IO loans are sold by sellers. People caught are not "investors" but sold a strategy for first time investment. Target is ARIPs asset rich (own a home) income poor (on a pension). Most aged over 65. Bankers approve these loans with NO verification. Yes immoral but it is in fact unlawful. New NCCP laws simply permitted the entire juggernaut to continue. Problem was ASIC made selllers the scapgoat for blame,. Not Lenders! Lenders are the Engineers of the product. Its still Low Docs and some Full Docs. Our surveys show 36% sold by bank staff. Same toxic approvals. Could be your parents - and inheritance. Loan imploides in 5 years - look at the statistics of the life of these 30 year loans. Investment property over priced. First timer investors lose their homes and bank chase them for average shortfall of $100k. Five years ago owned home, no debt and then home and more debt. Then Insurer comes after them for hardship payment reimbursement. What a way to treat customers. No repeat business necessary as people have been clean out and homeless at aged 70 - 80. If this sounds unethical try looking at bankers profits. $32 billion p a for 4 majors. The process is actually criminal and we expect charges to be laid against the lender inventors of product as intention was clear from inception. Sellers made to believe all compliance was genuine. Previous sellers claim they are also victims....and their parents.
  • Denise Brailey BFCSA (Inc) | 10 Dec 2014, 12:33 PM Agree 0
    Hmmm So which famous spruiker was bank rolled by which bank and lawyers? We know. Who paid for the venues? Who ended up with the most profits? Do you think these young guns bank-rolled themselves? They were broke. All dots are joining together: Banks, developer clientele, promoters, spruikers and then the sellers selling product. Very controlled indeed. Why a decade on, is Parliament concerned? What will the fallout be? People were keeping loan payments up via buffer loans. New loans approved on same system. No regulation meant ASIC said "lenders are self regulated. So we go after sellers as they are licensed and regulated by us." No Serious Fraud Office like US and UK so banks in Australia did not have to worry about pesky investigations into loan fraud. Particularly a High Level Control Fraud. Hence current high level discussions.
  • Well informed | 10 Dec 2014, 01:05 PM Agree 0
    Personally I think the spruikers include privately owned self named allegedly "not for profit" (?) consumer advocates (?)... I think they should be forced to provide their prospective customers with a product disclosure statement. This should include evidence of relevant industry experience and qualifications, a financial statement and disclosure of all the income received from members, and any organisational or private donations to ensure no conflict of interest exists. Apparently, some of these "groups" apparently charges $60 per client (generously discounted to $100 for a couple), PER ANNUM. for their consumer advisory services... Must have very few clients indeed still if unable to make a profit from this passive income stream.. Just saying..
  • Huh? | 10 Dec 2014, 01:25 PM Agree 0
    Someone contributing comments by telegraph. (Stop). Unsubstantiated, fabricated allegations. (Stop). Has own hidden agenda (Stop)... :)
  • Rebecca A Mitchell | 10 Dec 2014, 01:30 PM Agree 0
    I said No Docs not Lo Docs. Yes there are lo doc interest only loans.
    I am not sure how a true interest only loan can "explode" after 2-3 years. You are still required to make payments. My understanding & experience with "interest only loans exploding" are line of credits where the customer is capitalizing the interest therefore making no payments. I must say a lot of your last comment doesn't make sense & feels as though you are clearly referring to certain circumstances. Yes there are probably one or two brokers that may practice this behaviour but I believe overall the industry is doing the due diligence & practicing responsible lending.
  • Huh? | 10 Dec 2014, 01:45 PM Agree 0
    Rebecca I wouldn't worry about it, you are the voice of reason, the other person evidently has no idea what they are talking about.. I agree with you, this whole issue is a storm in a teacup. Nothing really to see here, move along...
  • Awesome Albert | 10 Dec 2014, 01:47 PM Agree 0
    Two articles today - one says the world about to end and another Bank economist comes out and says rate will drop next year by 0.5%. This article says the regulators might force the bank to hold more capital reserves against Interest Only loans. Look at the default and loss to lender of interest only loans and it seems APRA is about to do what the Banks who are busy trying to lend have forgotten. Price some risk into the loan products. Seems like good credit policy to me.
  • Steve McClure | 10 Dec 2014, 02:22 PM Agree 0
    I fear that lenders will jump on this and say "ASIC don't want us doing interest only loans". The hype & hyperbole of some comments aside, the cold hard maths proves that interest only loans are entirely appropriate & prudent for most investors and in many circumstances don't place owner occupiers in difficulty. The key is "the circumstances" of the client and every one of those situations is different. In fact, P&I pmts can harm a borrower's financial position.

    I can bore you with the math if you like but blanket approaches do more harm than good.
  • Observer | 10 Dec 2014, 10:16 PM Agree 0
    I've thought that an ideal macroprudential policy for APRA regulation to cap IO loans at a max LVR of 70%.
  • Tony | 11 Dec 2014, 10:05 AM Agree 0
    Gee... The demise of all those poor people targeted by lenders. Of course greed had nothing to do with it.
  • Tim | 11 Dec 2014, 10:36 AM Agree 0
    Just read this entire thread and it seems there actually are two different threads within.
    Denise having been in the lending industry for over 35 years I have seen plenty. You are correct to say there were plenty of "bad" interest only loans written however the vast majority of these type of loans have ceased although I too have seen in recent times some victims of these spruikers and poor credit staff. Go for them with gusto I say and I wish you every success in having the clients/ victims of these lending practices brought to justice.
    The other thread deals with common sense good practice lending and states clearly that in the right circumstances interest only loans are not only appropriate but "Not Unsuitable" for the client.
    As a professional broker it is my responsibility to ensure this premise of "Not Unsuitable" is paramount for my clients.
    Unfortunately we like any other industry have participants within our industry not with the same ethics.
    Hopefully ASIC and APRA can catch these unethical people.
  • marty | 11 Dec 2014, 10:47 AM Agree 0
    @Tim @ Denise who makes you the decider of what is acceptable or not. Get of your high horses! People need to make grown up decisions for themselves. End of story.
  • Denise Brailey BFCSA (Inc) | 11 Dec 2014, 12:22 PM Agree 0
    I am just the messenger. remember ASIC has been blaming the sellers for years for a problem they said did not exist????
    Yet when media started to see stories coming through, ASIC again blamed the sellers. The documents show they were altered inside the banks. The Products are to blame. The evidence coming to the surface affects many many people: borrowers and sellers alike. However the commentary is showing two schools of thought and its coming down to the good guys and the not so........
    Now if I was a customer, I know what thought patterns I would be looking for. Ethics will be more important than ever.
    The mis-selling is not the issue. The point is the banks approved a great number of unaffordable loans to vulnerable people that "could" affect your industry (and perhaps the economy according to their comments." The affordability was masked by the lenders. We know how it was done. We are simply asking Parliament to tell us how many like this were approved and by which Banks? We know 85% are with the 4 Majors. And what is the banking system going to do for the consumers who have been treated so badly?" These are serious allegations. APRA and ASIC are now mumbling the words they ought to have said a decade ago. Consumers were left unprotected by tardiness of regulators. So now we see who is on whose side. I am saying the Banks fooled the industry.
    Marty was right when he said: Oh Ohh
    This is our nations Oh Ohh moment.
  • marty | 11 Dec 2014, 01:24 PM Agree 0
    Denise sigh.. you have taken me out of context. I meant oh ohh hear come the misguided lending policies to protect the vast majority of people that don't need protecting.
  • Tim | 11 Dec 2014, 02:32 PM Agree 0
    Hi Marty No high horse here.
    I have seen first hand where bad lending has affected naive, uneducated peoples lives when firstly they were sold into a "buy an investment property and become rich quick" scheme and then had the lenders approve these loans. I have been asked to clean up the mess and unfortunately in some cases it is too late. What Denise is saying is that she sees these too, in fact I suspect she chases these people out and it is them who need protecting.
    On the other hand those who have the knowledge, get the right advice and make an educated decision don't need the same protection and I see plenty of these people as well.
    What I was aiming to say in the latter part of my earlier post is that I want to be sure that I am satisfied that the loan is "Not Unsuitable". This not only protects me but as important it protects my clients.
  • Ed | 11 Dec 2014, 02:33 PM Agree 0
    I agree with you Marty.
    We are letting the less than 1% determine how we live our lives. Most adults are adults. Denise you always see those that need help. You never see the millions who get on successfully and live normal happy independent lives.
  • marty | 11 Dec 2014, 02:53 PM Agree 0
    You can not regulate away ignorance, foolishness and greed.
  • Denise Brailey BFCSA (Inc) | 11 Dec 2014, 03:48 PM Agree 0
    Ed I am sorry if my message was unclear. Not my intention. I only help those in the category Tim mentioned: The vulnerable that fell for a bank manufactured "strategy." Thanks for clarification Tim. The novice sellers were told "go out and make people happy. Use the calculator."
    Yes the industry says 1%. ASIC say 3% of the industry are rogues. I agree and 97% of sellers doing the right thing. But 100% of LAfs we have looked at (bank copies) are fraudulent and forgery in some cases. Sellers were told to shred the original and media picked up on that in 2011. 1% may be correct we do not know unless APRA dig for the data that is hidden or unless we have Royal Comm into Banks. The Big Banks approved the lion's share of these loans. Low Docs were meant to be business loans. I have 2000 emails from banks to the channel. I know of the ABN for a day internal to bank scams. Meanwhile we have endless Senate Inquiries and others because all these complainants are real people losing their homes as loans implode after 5 years as buffer monies run out. However, ATO did a Loan App survey, cross correlation with tax. They do this now and again. I met the official investigators in 2005. I showed them a sample of several Tax Returns showing $50k income (with members' permission). Clearly, the files at the bank showed $190K approx. At that time we did not know the banks were tweaking the calculators. The CA's calc is differently geared to the Planner's (the NSR). However the 800 loans to tax surveyed by the ATO showed very high % of big discrepancy of incomes. I explained: One of the figures is false. Answer: if its the LAF that is false.....nothing here for us. Tax Office only look for funds when they are missing out $$s. They have a claw back drive. The Report was announced on Kohler, dropped the day after my visit, and never released. They told me "its a Job for ASIC." I said "yes indeed."
    So in 2014 do we really know how many are of this ilk? Not yet but, the patterning is clear. Marty I hope it is 1% but all these Inquiries and other back up data suggests otherwise. Centrelink has had a rise in requests for housing allowances, and housing is tough for states. Warning signs are there and staff said "its Low Docs."
    I can only write about what I know to be true and what I have discovered. Its for others to determine what's ahead. Economists tell me other things which are alarming warning signs. Certainly these allegations and documentation into faulty products and faulty approvals need a through examination. Sellers did not approve the loans and someone was "tweaking." We are told "its was all done by a computer processing program." All unverified. The sellers did not know what happened to the forms after they were sent in. Its for the Industry to work out what they have to do.
  • Denise Brailey BFCSA (Inc) | 11 Dec 2014, 04:04 PM Agree 0
    Sorry Marty. I did misunderstand. Yet its still an Oh Ohh moment. Yes if "a few" are victims to the number of loans approved eg 2000 or more I have seen, then policies need to be in place to protect those people. Simple solution as I suggested to Parliament: Banks must insist that the people who sign Loan Apps must be given a copy of the entire 11 page document (or 7 page computerised) at point of signing and every page signed. Then Bank send their copy to the client prior to the monies being received by the customer. So simple and what's wrong with that idea? Then I could retire. If everyone were given a copy at point of signing of the original and later the bank's copy it relied upon to approve, then less chance for mass tweaking. Few knew this was going on - not the borrowers and not the sellers. Same as in the US and the UK and elsewhere - no-one had a copy yet 100% are false. This who contact me from overseas....same problem. Emails shocked at the fraud being used. How do we explain that and what do we, as consumer protectors, do? More importantly what do novice consumers do? If the good guys in the industry (tomorrow would be good) handed out a full copy on all mortgage Loan Apps and also taught their customers to demand copy from Lender before the money arrives...all would be well. Oh and a copy of the service calculator which says: "do not show to the borrower."
    That would help everyone.
  • Denise Brailey BFCSA (Inc) | 11 Dec 2014, 04:09 PM Agree 0
    Marty u must be a banker. Whilst there is that attitude then expect more of the same............. and the industry will pay a very high price. In other financial scams the same attitude ended up collapsing the industry. The irony here is that the Bankers are the culprits, yet the sellers will become collateral damage same as the borrowers. Oh well.
  • Marty | 11 Dec 2014, 05:38 PM Agree 0
    Not a banker. Never been a banker. I know you come from a good place Denise but you only see the disasters. Sooooo many other people would have equally as compelling good stories about how they pushed the limits to a degree and it paid off. I have seen too many of these to count.

    A lot of the stories you allude to sound like bad investments made by naive people.This is sad but will continue to happen as long as we live in an open society. Let's be careful what we wish for.

    Reasonable lending policy supported with regulator over sight but not a total nanny state with prescribed risk tolerance of 0.
  • Marty | 11 Dec 2014, 05:48 PM Agree 0
    You want to get our lending to be what it is like on the US? Ben Berneke (ex head of the federal reserve) was recently declined for a home loan because he had just started a new job (contractor). Do we really want a system where this could happen here because of prescribed rigid lending rules?
  • Ed Ridge | 12 Dec 2014, 07:35 AM Agree 0
    Denise, we all understand your frustration after years and years and numerous chairmen and committee's no one is taking you message seriously, perhaps it's the delivery?! I don't think it would be out of line to ask that perhaps you take a little break from telling us constantly the same thing...we get it.
  • Tony | 12 Dec 2014, 08:40 AM Agree 0
    Yep change the delivery and single out those who were actually mislead versus those who just simply decided they had made an investment mistake and are using do gooder advocates to spruik their case.
  • Ed | 12 Dec 2014, 11:25 AM Agree 0
    Hi Denise by less than 1% I was referring to the people foreclosed upon each year, the borrowers not the brokers. Many borrowers do very well for themselves after investing wisely. You can't protect the last <1% of borrowers from themselves. Just about every broker has a client that they have helped by doing a very difficult debt consolidation only to find that a year later the cards are maxed out again despite numerous warnings from us to not open anymore cards etc. Who is responsible for that the broker, the bank? Your clients need to take some responsibility for themselves.

    Heartless banker I hear you say. Consider this.

    In education if a teacher structured their lessons around the capabilities of the lowest 1% of their students the middle and top students would miss other opportunities.

    If some people can't make a go of it in Australia then imagine if they had been born in Africa. Even if people totally balls up their life here they can still get a roof over their heads via housing commission and pension. We are an inordinately generous country that is why people try so hard to get here.

    Do not get me wrong there are sharks out there and those that take advantage of them should be put away.

    However there is a price to be paid by trying to tighten the laws further to protect the last 1% and that is the freedom of the 99% to make their own choices.

    The balance is tipping too far towards protection.

    Sadly no matter how much we tinker with the laws you will always have someone that manages to get themselves into trouble. That is life. We ban drugs but still the drug trade thrives.

    IMHO you should invest more time educating your clients. If not for their sake then for that of their children.

    However I do commend you on your tenacity. You must have a big heart
  • Denise Brailey BFCSA (Inc) | 12 Dec 2014, 11:38 AM Agree 0
    Its good to see discussion on the table, but Gentlemen, do you really think I am doing this for my health? Do you really think I would spend my valuable time looking after seasoned investors who made an error of judgment and then cried out? I sit with people who are elderly, whose lives have been ruined by loans that even the Government agencies and senators agree, loans that ought never to have been approved. Their pain is our nation's shame. If there are only a couple of thousand, is that not a key indicator there are more of them suffering in silence? If only say 2000, then why would the banks not simply write off these toxic mortgage loans as they did for me in 2003? Could it be that the industry is unaware the possible scale of these approvals? Decent advisers have no idea this is happening. I am just the messenger. I am telling Parliament what I have found in documented reports with evidence attached and which banks are the main offenders. Do not try to demonise the victims... It makes them angry in the five stages of grief.
    Rather, we should collectively try to assist in pin-pointing the culprits and if the products are faulty, then have warnings on top of mortgage contracts the same as on cigarette packets. That should be effective and then we all win. I am simply trying to clean this up. Banks say they want confidence and trust yet the banks are hated amongst those who have suffered financial wipe-out. Its a quiet rage. This issue will not subside unless there is a day of reckoning. But you seem to be thinking: "I hope this goes away and lets blame the consumer and the messenger." Even the Parliamentarians are not doing that. The Regulator used that line for 10 years and now is getting publicly flogged.
    Not a good look saying "you purchased the faulty deceit laden product so its your fault for buying it and you deserve to lose the home you owned. Your punishment is loss of home and we will mire you in extra $100k debt..." Has nice ring for some people. Not me I'm afraid.
  • SEQ Broker | 12 Dec 2014, 12:14 PM Agree 0
    Oh Dear. My opinion is that if a borrower does not agree with the documentation then they should not sign and not proceed with the loan.

    Who does 30 year interest only loans, I have clients that want one or two years to free up cash flow while they might pay down another debt or put furniture in their new home without taking on any further debt particularly consumer debt which is expensive. Also what lender approves a 30 year interest only loan to a pensioner? I have a 65 year old real estate agent as a client and have had all sorts of difficulty refinancing his 7.5% P&I loan to a 5%ish P&I loan despite income and expenses being all evidenced and a clear benefit. That's thanks to ASIC's policy being misunderstood and wrongly applied by lenders. I would rather not see more ASIC policy that both allows lenders can distort to manage their risk and further enter Australia into a nanny state.
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