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Clear as mud: Denovan wades through the employment verification quagmire

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Australian Broker | 18 Apr 2013, 08:00 AM Agree 0
Lending regulation expert, Jon Denovan, offers some rather unorthodox advice for brokers confused about employment verification requirements
  • NoTimeLikeTheFuture | 18 Apr 2013, 11:27 AM Agree 0
    Thankyou John.

    Fantastically frank and practical advice there.

    It sums up where i think most brokers are -

    'it's clear but unclear and we suspect we're probably breaching something somewhere but we don't know where and we try our best not to'

    In the end we have a drink and get on with it.
  • D'Arcy - Qld | 18 Apr 2013, 11:28 AM Agree 0
    Oh well - if I MUST !
  • Tony South Coast | 18 Apr 2013, 11:31 AM Agree 0
    I have been broking for 16 years and, John -- you are right, I definitely drink more now than I used to. Cheers everyone.
  • ozboy | 18 Apr 2013, 11:31 AM Agree 0
  • Patrick Marion | 18 Apr 2013, 11:34 AM Agree 0
    There's nothing unclear about employment verification. As Donovan says, it's plain common sense... but then again common sense is not common.
  • BONED | 18 Apr 2013, 11:37 AM Agree 0
    Thank god someone stipulates the use of (un)common sense! We can't help everyone - it's no sin to say no, cop it on the chin and walk away, as I assume most good Home Loan Professionals do now anyway...
  • QEDRisk | 18 Apr 2013, 11:41 AM Agree 0
    John and I do not always see eye-to-eye but I think this is the most wonderful piece of advice I have seen from a lawyer in years.

    Brokers - don't get yourselves bogged down in the specifics of what you think ASIC are telling you. Just sit back for a minute and let your common sense and professional judgement prevail!
  • Chris C | 18 Apr 2013, 11:44 AM Agree 0
    Thanks for your common sense approach Mr Donovan but to use common sense and the law in one sentence is a contradiction in its own right. We all know common sense plays a major role in everyday life but it plays a very minor role in any court's deliberation on the law. We brokers are best off just doing everything possible and practicable to best meet the terms of reference.
  • Papery | 18 Apr 2013, 11:46 AM Agree 0
    Im in....who's shout is it!!
  • Rach | 18 Apr 2013, 11:59 AM Agree 0
    Exactly - we try, we really try to do the right thing, and we just hope that we're not breaching anything - And then we go home and get tipsy (at least! lol)
  • Jeff | 18 Apr 2013, 12:06 PM Agree 0
    Civil AND criminal penalties for a legislation with no clearly defined rules, nor direct answers...just a do what you think is right, and take a chance they dont interpret it differently, at some time in the future...more chance of winning 'pin the tale on the donkey'.
  • Steve | 18 Apr 2013, 12:18 PM Agree 0
    This is further proof of the power of "word of mouth" referrals rather than leads from online world or other sources. You know these referrals are authentic with no need to forensically analyse payslips becuase trust exists.
  • Wp | 18 Apr 2013, 12:28 PM Agree 0
    Interesting that the legislation is supposed to get us to act in the interest of the borrower.
    The client can be sitting on a no doc loan taken out years ago and is at 8.5%, and can prove that they can pay the loan via the fact of having never missed a payment.
    Even if we have a lender willing to refinance at 2.5% lower, and that is clearly in the best interest of the borrower, even if they are struggling with the payments, we cannot act in the best interest of the borrower. The regulation specifically prevents us from acting to improve the position of a borrower if they cannot prove their income, or will struggle with the new loan, even if the struggle will be much less than the current loan.
    I find it bazar that legislation designed to help people is actually locking w whole heap of people into old and expensive products, leaving them vulnerable to those lenders jacking up the rates, knowing that the borrowers can not leave.
  • Peter B | 18 Apr 2013, 03:41 PM Agree 0
    You have one me John, cheers
  • Phil O | 18 Apr 2013, 05:28 PM Agree 0
    To those that are whinging - perhaps that journalist was right and brokers are just "washing machine salesmen" - the fact is it is not hard for someone to prove something that is authentic - the one's who won't/can't normally have something to hide and are the ones where extra verification must be made.
  • Macca | 19 Apr 2013, 10:12 AM Agree 0
    I find it hard to believe that anyone see' s that there is grey areas in any lending practices. The borrower can either afford the loan or cant and it is up to the final lender not the broker by law to verify income. If they dont follow these steps then they deserve whatever comes their way. ASIC is only there to police the industry if you follow the correct path of collecting all the right information then there is nothing to fear.
  • Alikat | 19 Apr 2013, 12:50 PM Agree 0
    There is nothing honest about Gadens Lawyers. They are not overly concerned about regulation either. They make most of their money out of pursuing defaulting mortgage holders who were provided credit without having their income fully verified. It will be bad for their pockets if brokers and banks alike finally adopted sensible and credible lending practices.
  • Julia Bungonia | 19 Apr 2013, 01:48 PM Agree 0
    Brokers are like real estate agents - working for both sides in the deal. Borrowers are easy pickings unless the broker does his due diligence.
  • mark ogier | 25 Apr 2013, 06:48 PM Agree 0
    my wife has just lost her job but with conditional loan approval with rams. we want to know if there will be a final employment check?
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