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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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BFCSA: Nick Hubble compares Australian sub prime to UK....Similarities in Fraudulent Unaffordable Mortgage Loans

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THIS SUB PRIME MESS and the Australian Loan Application Scandal
The LAF Mortgage scandal:  Nick Hubble is feature Editor of Daily Reckoning Australia. Having gained degrees in Finance, Economics & Law from prestigious Bond University, Nick completed an internship at probably the most famous investment bank in the world, where he discovered what the financial world was really like.  

Do you have a mortgage? There is a 1 in 10 chance you have been tricked. The trick is the very same one played on borrowers in the US, Spain & Greece. And that turned out to be devastating, not only for the borrowers, but for the entire world economy. As a UK mortgage broker admitted, brokers were specifically trained in how to turn their subprime borrower into a prime one by falsifying income. So when vast amounts of borrowers begin defaulting, who will pick up the tab? 

Banker: "Hi Nick, I work for one of those 36 banks, statements made by Denise Brailey simply don’t happen." 

All this reeks of the beginning of the American subprime mess. Peripheral finance companies going bankrupt because of dodgy mortgages while the banks sit pretty, claiming their bad loans are at perfectly normal levels.. Will the insurance companies go after the banks and mortgage brokers for misleading them?

The shadow banking industry buys the ‘prime’ loans and packages them into investments for you and me to lose money on when the mortgages turn out to be dodgy. The key to the mystery is the Loan Application Form (LAF). On it, a bank will include your financial information, and the loan is approved based on what’s on that form. If bankers and mortgage brokers add on a couple of assets after you leave their office, nobody will be the wiser. But the banker will be the richer after he gets his (big fat) commission........

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Following the Money:--By Nick Hubble • August 21st, 2013  

"In case you’re wondering, mortgage insurance protects banks from loan defaults. Part of our story on the LAF scandal is that mortgage insurers are being shafted. They think they’re insuring bundles of prime loans based on the mortgage paperwork, when all that paperwork is fiction. As a UK mortgage broker admitted, mortgage brokers were specifically trained in how to turn their subprime borrower into a prime one by falsifying income. One imaginative method includes inserting a ‘1’ in front of you borrower’s $30,000 income, suddenly making them able to afford a $400,000 loan. The same is going on here in Australia.

--So when vast amounts of borrowers begin defaulting, who will pick up the tab? Will the insurance companies go after the banks and mortgage brokers for misleading them?  ....."

 

Possibly the Most Important Thing You Will Ever Read in Money Morning

Written on 04 October 2012 by Nick Hubble

The No-Doc Loan Mortgage Scandal

We wrote about it a few weeks ago. The story goes that bankers and mortgage brokers abused the lax lending standards that came with no-doc loans.

These were supposed to be for people who didn’t have the typical documentation you need to apply for a loan. Business owners, for example, don’t get a regular pay-cheque.

But anyone who couldn’t get a loan because their documentation showed they couldn’t afford it simply applied via the no-doc loan route instead. The banks provided an ABN to make it look like the applicant owned a business.

On top of that, they threw in imaginary income and assets and, as simple as that, the loan was approved.

What’s crucial to understand here is that this happened without the borrower knowing. They just knew they were getting the cash. And the lender knew they were getting the commission or bonus for doing so many deals.

The key to the mystery is the Loan Application Form (LAF). On it, a bank will include your financial information, and the loan is approved based on what’s on that form.

If bankers and mortgage brokers add on a couple of assets after you leave their office, nobody will be the wiser. But the banker will be the richer after he gets his commission........

http://www.moneymorning.com.au/20121004/possibly-the-most-important-thing-you-will-ever-read-in-money-morning.html

Australia’s Shadow Banking Sector is Collapsing 

By Nick Hubble • August 6th, 2013 • 

The collapse in Australia's shadow banking sector is happening in slow motion, mostly delayed by Australia’s epic bureaucratic and legal shenanigans. But it’s happening nonetheless...

-Unlisted Unrated Debenture providers Banksia, Gippsland Secured Investments, Australian Secured Investments Limited, Wickham Securities, FinCorp, Westpoint, the Cherry Fund, Cymbis Finance, and many more have all failed.

We googled the names on ASICs list of debenture providers, and got more ‘in liquidation’ and ‘administrator appointed’ in the results than not. Angas Securities could be next, with S&P downgrading the firm’s credit rating and ASIC requesting it stops issuing new debentures.

UUDs are, were a favourite amongst retirees because they were often marketed as ‘bank like’ investments offering a slightly higher return than term deposits. But they don’t have a government guarantee, as people are learning the hard way.

All this reeks of the beginning of the American subprime mess. Peripheral finance companies going bankrupt because of dodgy mortgages while the banks sit pretty, claiming their bad loans are at perfectly normal levels.

But why did the UUD’s get left with all the dodgy mortgages? We reckon it’s because of the LAF scandal we wrote about. Bankers and mortgage brokers just inflate people’s incomes and assets on loan paperwork to make sure their loans are approved. A sub-prime loan becomes a prime loan on paper. The shadow banking industry buys the ‘prime’ loans and packages them into investments for you and me to lose money on when the mortgages turn out to be dodgy.

If you factored in all the defaults in the UUD loans, what would the state of the Australian housing and finance industry really be?

For a hint, you could look at New Zealand. Seven years into its own debentures debacle, $3 billion is missing from 200,000 deposit holder’s accounts. The taxpayer was on the hook for another $1 billion.

Here in Australia, debentures make up a whopping 7% of total deposits and debt securities. In other words, a crisis in the debenture markets, if it’s recognised as such, could cause real problems for the banking sector, not just the shadow banking sector.

 Unfortunately for investors in the Aussie UUD market, there hasn’t been a government bailout...for now. Of course, the real question is whether this virus comes out of the shadows and into the real banking sector.

http://www.dailyreckoning.com.au/australias-shadow-banking-sector-is-collapsing/2013/08/06/

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Comments

  • doyla66
    doyla66 Saturday, 24 August 2013

    Loved the comment by "Banker" in this blog. This guy must be absolutely naive to believe these fraudulent and sordid attacks by the banks do not happen. Where do you come from Mr. Banker, I think maybe another lifetime ago or another planet. If you would like evidence by all means I can supply it for you. Nab are nothing but cheats and liars. This I can substantiate. My list of misrepresentations which is putting it nicely include. Altering loan applications after they were faxed back. Actinging without authority, unilaterally adding a guarantor without his knowledge. Not contacting any of the alleged loan applicants (4). Breaching our privacy. Conditions precedents set by Nab but not adhered to. No taxation details collected. Accepting the word of a Broker who had not met with or spoken to any of the alleged applicants (4). No hardship conditions ever offered or allowed. Concealing the Laf documents. Losing complete files and documents. In fact the Broker never completed a LAF only thing ever signed by 1 applicant only was for the Broker to receive his fat commission. Confusing family members as husband and wife when actually brother and sister and much more. What do you call these Mr. Banker. It is disgusting and predatory and makes Nab look like fools. Nab certainly live up to their bad reputation in this case. My husband have lost our home of 42 years because of the Nab's fraudulent incompetence and I am angry if you have not already guessed.

  • doyla66
    doyla66 Saturday, 14 September 2013

    Thanks, Nick. More pieces for the puzzle that is the Australian Financial Services Industry :)
    We hear about "the economy". When you look at all the parts behind this economy its quite complicated - and plenty can go wrong and drag "the economy" down.
    There are financial products, many of which have been around for years. It looks like no one with any clout in government has taken a closer look at whether these are good products or bad. Probably no one asked them to look. So on it went. If it doesn't cause a big problem on a repeated basis just leave it as it is? Is that it? No quite - if they can hush it up they will, especially in financial services.
    After all, it might damage "the economy" if Australians and others around the world actually knew what was really going on!
    Deceptive and misleading conduct? Or "damage control"? Or you just need to know where to look to get the information.
    Just like consumer protection... which has been almost non-existent in Australia.
    Loan fraud should be up in lights and starring on the front pages of our newspapers!
    If we make enough noise about it, it will be. Much more noise needed, especially on the internet and social media. Enlist support.
    A year ago we were asking: How big does the mess in the Financial Services Industry have to become before Government will attend to the problem correctly?
    After all Storm, Opes Prime, Westpoint, Trio, LM Investments, Balmain Trilogy, and so many others were sizable messes.
    HIH at least resulted in a Royal Commission - are they still sorting this out over 10 years later? And who is footing the bill?
    What about prevention being better than cure?
    If only we could get the Australian public to understand that all investment in Australia is potentially gambling your money. The main variable is the size of the risk. Some products are more risky than others.
    The illusion that an investment based on bricks and mortar and lots of hard working aspiring mortgage payers should be looking rather tatty. Unfortunately many are staying in the RMBS market despite this information being widely known. That's how it looks from this angle, because we know. But in suburbia even people who should know are either in denial or don't know that Australia has a ratty tatty unregulated swiss cheesed investment industry which I predict will be toast when we all get the volume up on our cases.
    Sadly it takes the collapse of a massive chunk of the investment market to get the attention of enough people and the MSM and the government before any action occurs that could benefit us.
    I feel rather sorry for all the investors who have been sold a real dud by Banks, financial people and government.
    Their day is coming. Toast.

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