Mortgage insurer Genworth has admitted it played a crucial role in tightening up loan regulations in the wake of the GFC.
In a media teleconference held yesterday, CEO Ellie Comerford said Genworth applied serious pressure on lenders - including the Big Four - to review how lo-doc loans were granted.
Key figures have blamed the proliferation of lo-doc loans in 2007/8 for the number of repossessions now.
Last month, WA broker Warren Dworcan told Australian Broker Online lo-doc loans were irresponsibly approved in the pre-GFC days.
“A lot of self-employed people, for example, were able to take out loans without the evidence they could afford it. It was all unsubstantiated, but got approved. The false sense of growth experienced in WA leading up to the GFC simply pushed the envelope. It was all about over-capitalising and over-extending,” he said.
Yesterday, Comerford hinted that the current spate of claims Genworth is processing could be a result of careless lo doc approvals five years ago.
Meanwhile, the company recorded a $44m profit for the June quarter, which was welcome news for its US parent.
Genworth has been battling higher insurance claims over the past two years which has significantly hurt profits.
Speculation of a closure or sell-off by its US owner was denied yesterday.