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BFCSA investigates fraud involving lenders, spruikers and financial planners worldwide.  Full Doc, Low Doc, No Doc loans, Lines of Credit and Buffer loans appear to be normal profit making financial products, however, these loans are set to implode within seven years.  For the past two decades, Ms Brailey, President of BFCSA (Inc), has been a tireless campaigner, championing the cause of older and low income people around the Globe who have fallen victim to banking and finance scams.  She has found that people of all ages are being targeted by Bankers offering faulty lending products. BFCSA warn that anyone who has signed up for one of these financial products, is in grave danger of losing their home.


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AOFM: Summary of "papier-mache binding" program ..available via following link

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AOFM's $25 billion Papier mache binding program -- the securitisation of YOUR mortgage or "promissory note" without notice given, nor "tranche" specific identity being lawfully furnished to the home-owner --has now employed an information "censorship regime".

Australian Office of Financial Management ["AOFM"]--the  designated responsible-entity as "gate-keeper" of AOFM public records and/or program details, purports transparency thru it's "website" --created for the specific purpose of timely informing the tax-payer of AOFM's "massive" Residential-Mortgage-Backed-Securities ["RMBS"] purchasing program--folly.

However, nothing could be further from the truth, as relevant AOFM material "downloads" present fully "white-outed".

Ummm...does this have a familiar tone, ala fraudulently "white-outed/manipulated" bankster loan application forms [LAF] --the genesis of the RMBS fraudulent process?

The AOFM's Website states the following:

" A summary of AOFM participation in RMBS transactions is available via the following link:~ 

Go figure????

Furthermore AOFM intends to "frustrate" the user of it's website by allowing some files to be "downloaded" whilst hindering "others" 

For example: AOFM implemented "measures" put in place to NOT ENABLE the "filing" of its 

Economics References Committee: Inquiry into the post-GFC banking sector

  • AOFM Opening Statement – Senate Committee Hearing (21 September 2012) - PDF|RTF


"" The document “Senate_Committee_Hearing.pdf” could not be exported as “Senate_Committee_Hearing "" 


AOFM in effect forces the "user" to re-type it's contents "verbatim" ...and only allows perusal. why does the AOFM suppres it's general publication??? 

Go figure....someone may wish to "proof read" the document, which states:

Economics References Committee: Inquiry into the post-GFC banking sector

AOFM Opening Statement – Senate Committee Hearing (21 September 2012)

"  The AOFM appreciates the opportunity to add to the record regarding it's 'involvement' in the Residential Mortgage Backed Securities market and in particular it's exposure to low doc loans. To clarify the means by which it participates in RMBS, the AOFM does not purchase loans per se, but rather it invests in 'securities', which are secured by prime loans, some of them 'low doc' loans. Furthermore, there are no 'subprime' loans amongst the mortgages underpinning the RMBS in which the AOFM has invested.

Let me explain...the basis the AOFM's involvement in 'low-doc' loans. Since the commencement of the RMBS program in 2008, the AOFM has maintained the view that it'smandate does not include seeking to fundamentally change the nature and structure of the RMBS market, and the mortgage market more generally.

We see our role as facilitating the use of the securitisation as a means of capital raising for the small ADI's and non ADI's[ie: Banksie & Provident"], thereby providing more general support to competition in the market for prime mortgages.

We have not sort to improve 'value' judgments about the sort of lending that is 'worthy' of Government support. As low doc lending was a valid form of lending to the "self-employed" and small business owners, had we declined to invest in RMBS supported by pools containing at least 'some' low doc loans, it is likely that the availability of credit to the self employed would have been 'negatively' impacted.

Having said that, the AOFM went into this investment activity aware that the performance of low-doc mortgages is on average worse than full doc mortgages. By this we mean that the 'arrears' experience for pools of predominately low doc 'prime' loans is 'typically' above that of pools containing solely full doc 'prime' loans. To illustrate this point, as at the end of June this year, Standard & Poor's reported a 30days+ arrears rate for all prime loans of 1.50 per cent, which they decomposed 1.26 for 'prime' full-doc loans and 6.07 per cent for 'prime' low-doc loans.

For pools containing more than 10 per cent low-doc loans, the AOFM has insisted on RMBS sponsors meeting additional criteria and measures, including that a cap on the maximum loan to valuation ratio of all these loans be set at a 'lower' level, and requiring that these loans be covered by lenders mortgage insurance. To date, the AOFM have only participated in one transaction where the share of low doc loans was greater than 10 per cent of the underlying pool, and in this case it only invested 10 million, of which over half has been repaid 'without incident' in the two years since the investment was made. 

(note: no apparent 'probity-checks' on fraud 'manifested' [illegitimate-duress] forced and/or [ wilfully-unjust]lender-imposed RMBS redemptions linked to AOFM's pool of 'investments').  

AOFM has in place a 'risk-based' due diligence program for it's RMBS investment activity. [> more like a "Risk-Averse" program]. However the level of assessment varies depending upon the particulars of the 'sponsor'. [code for --mates getting the 'light-touch']. A small 'unrated' sponsor will typically receive a site visit form us in which we conduct interviews with key personal with a 'focus' on the organizations 'loan-approval' process and it's ongoing 'servicing' and 'collections' framework. The AOFM willraise any concerns and require satisfactory changes 'prior' to agreeing to invest.

The 'site' visits continue on a regular basis, even if no further investment is in prospect. The AOFM recently answered questions on notice regarding the number of rejections it has of RMBS 'investment proposals', including those on risk management grounds. For reasons of 'confidentiality', we don't want to get into the detail on who specifically has been rejected and why.

Suffice to say believes it has allocated sufficient professional expertise to the management of the RMBS program and specifically to anticipate the resulting risks to the taxpayer. As at the end of July, the 30day+ 'arrears' for it's portfolio stood at 1.1 per cent; this was below the full doc and broader 'prime' benchmarks to which one just referred. Furthermore, just two of 98 securities in which the AOFM has invested of the last four years have been downgraded. Both of these downgrades 'occurred'  as result of a ratings agency 'changing' it's 'methodology'; and both have since had their "AAA ratings" reinstated.

As well as the AOFM's 'due diligence' activities, it's investments benefit from a number of lines of defence. Specifically, the AOFM requires what are known as 'pool' and 'tie back' audits. We insist that each pool audit specifically reference AOFMS's minimum criteria. As another line of 'risk' defence, lenders mortgage insurance covers the vast majority of pools, with the weighted average coverage rate being around 98 per cent across the AOFM's RMBS portfolio. Yet another crucial line of 'risk' defence is the so called 'tranching' of each transaction, together with the limits placed on the AOFM's investments to AAA rated notes, this means that the owners of more heavily weighted subordinated, or 'first-loss' tranches, provide additional protection, to the AOFM's interests.

There are extreme circumstances that would test the 'robustness' of these lines of defence --the obvious one being the case whereby the mortgages are declared "legally invalid", resulting in the loss of access to the associated stream of payments. We are aware through the "media" and this enquiry that allegations have been made regarding "fraudulently" originated mortgages although we have 'not seen' or 'heard' of any evidence of this in connection with the mortgages underpinning AOFM's RMBS portfolio.

[so, Mr AOFM, about ensuring all BFCSA(inc) members be given confirmation of the particular 'tranche' their  respective 'securitised' mortgage may have been destined to arrive, as requested under the Privacy Act  of recent?]

Having said that, and despite these 'defences' [referred to above] we could consider in 'theory' the impact of this as an scenario, and in fact take it to it's extreme and assume that all low doc loans were considered ‘worthless’ from an RMBS investment standpoint.

First the AOFM's investments stood at $11.1 billion as at 31 August, 2012. The mortgage pools backing these investments contained a total of around $25 billion at this time. Of these $25 billion in mortgages, less than 2 perc cent, or just over $400 million, comprised [of] 'low-doc' loans. However, the ranking of the tranches in which the AOFM has invested means that any 'losses', even in the most catastrophic event, would be significantly less than this amount.

It is unlikely, that one of our lines of defence, namely lenders' mortgage insurance, would provide protection in this scenario. However, the third line of defence in the form of subordination would provide a significant buffer. We estimate, in this 'extreme' scenario the AOFM would suffer a loss on it's investment equating to around '0.50' per cent of the AOFM's total investment.[$50m?~$100m?]

Finally, because the AOFM only invests in RMBS that contains mortgages that have already been 'originated', it has neither involvement in nor control over how the'practice' of mortgage lending is undertaken. [just dandy, turn a Nelson's eye, like the girl said to the sailor, "follow~me"]

This is 'clearly' a matter for the financial industry to organise, practise and 'monitor'. Furthermore, it would simply not be practical [or reasonable] for the AOFM to employ the substantial resources required to 'vet the detail' of every mortgage behind every RMBS transaction in which it has or may be asked to support.

We estimate, that there are over 129,000 mortgages that underpin the RMBS transactions that we have been asked to analyse and support, and of this total about 2000 of those would have been 'low-doc' loans.  "

The tide turns for ratings agencies

Standard & Poor's [cohorts] until this weeks Australian court decision sat comfortably behind the [purported] protected free speech under the first amendment to the US constitution, spuriously asserting that investors could not rely on the credit ratings issued by the 'agencies' as they were only "opinions" and not "financial advice" and there was no contract between the investor and the credit agency. But this is not the Americas and any abused first amendment "shield" is not a US product import 'down-under', otherwise granting impunity to credit agency's misdeeds operating within strained US jurisdiction.
Events must now compel the AOFM to immediately "REVIEW" all RMBS purchases completed under the umbrella of the credit agency's imprimatur, purporting "AAA" status, as their "stamp of approval" is not worth the Papier mache binding process it's written on, that is, the RMBS related 'paper', bought "site-unseen" relying on contrived Standard & Poor's endorsed 'face values', --ongoing since 2008 on behalf of Australian Taxpayers (inc) --as they must be deemed --"unsafe' and/or "unclean" securities.

The tide turns for ratings agencies

Published 5:52 PM, 5 Nov 2012

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