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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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Low-doc clients denied access to forms: SHAME FIRSTMAC

Posted by on in Fraudulent Loan Apps
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by: ANTHONY KLAN

 

Ken Powell

Ken Powell, at his home in Halls Head, Western Australia, faces losing his and his wife's home. Picture: Colin Murty Source: The Australian

 

ONE of the lenders at the heart of the low-doc banking scandal will no longer provide borrowers with access to their loan application forms, despite widespread concerns the documents may have been fraudulently manipulated.

 

Firstmac - against whose loans the federal government has invested $1.5 billion - said it would deny borrowers the right to access information about the income and employment status that appeared on the loan application forms.

The statement follows revelations by The Australian that during the last property boom, loan application fraud was widespread, with mortgage brokers and others in the lending chain overstating the income and other financial information of borrowers in the chase for profits. The products of choice were low-doc and no-doc loans, which required no proof of income and where lenders as policy would never contact borrowers to verify information submitted on loan application forms.

Retirees Ken Powell and his wife, Maureen, face losing their family home after being given a 30-year, $300,000 loan when they were in their late 60s.

Now the couple have discovered their financial position had allegedly been vastly misstated in the forms used to obtain the loan.

Following revelations of the low-doc scandal, Mr Powell requested a copy of his loan application forms from lender Firstmac and his mortgage broker, and discovered a raft of inaccuracies, including claims he was employed "full-time".

"I was unemployed so I didn't enter any occupation details but someone has gone in there and handwritten that I'm an 'investor' and that my work was 'full time'," Mr Powell said. "At the time I didn't think I'd get the loan but they approved it no worries."

A copy of Mr Powell's 66-page typed loan application credit pack, obtained by The Australian, shows correct information provided and signed off by Mr Powell has been typed, while incorrect information, such as his employment status, has been handwritten by someone unknown.

The federal government has spent $1.5bn investing in securities backed by Firstmac loans, including $68.1 million of Firstmac low-doc loans.

Firstmac refused to comment on the case, citing confidentiality, despite Mr Powell granting The Australian authority to make inquiries on his behalf.

"Firstmac reiterates its position regarding its no comment position on individual clients," said spokeswoman Dianne Monopoli.

Another spokeswoman, Julia Thornton, said Firstmac and its brokers would no longer provide credit pack loan application forms - those received by Mr Powell - to borrowers, despite borrowers' signatures being on the forms.

Ms Thornton said Firstmac would give borrowers only a "standard loan application form (which) is two pages in length" and the loan contract.

A number of recent court cases - including a precedent-setting case involving Firstmac in June - found in favour of borrowers who have been subject to predatory lending practices and loan fraud.

A key to borrower restitution is providing evidence of doctored loan application forms showing inflated incomes.

Judges have ruled existing laws must not be used to provide compensation to investors because of their own negligence or bad decisions, but they must protect vulnerable borrowers, such as retirees and the less financially savvy.

Mr Powell, who had operated a mobile knife-sharpening business before retiring and moving to Mandurah in Western Australia, said he had applied for the loan after seeing a mortgage broker's television advertisement.

He had invested much of the money in the stockmarket, which collapsed shortly afterwards.

A Senate inquiry into the Australian banking sector was told last week that low-doc loan fraud was rampant during the years before the global financial crisis, with lenders making loans to many people who could never afford to repay them.

The lenders were able to issue these loans because they were required to be secured against an asset, usually a person's family home, which could be sold if the borrower failed to make the payments on the loan.

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COMMENTS ON THIS STORY

  •  
    Lazza of gold coast Posted at 4:55 AM Today

    These sort of loans were the cannon fodder used by the sub prime packagers that caused the GFC crisis

     

  • rodney allsworth of morayfield Posted at 5:05 AM Today

    how on earth can the banks deny the very client access to his own information on such an important document,

     

    Noel Buckman of Nolmesville NSW Posted at 7:03 AM Today

  • Looks like those same scoundrels that caused the collapse of the USA housing financial institutions are now triggering the same corrupt scheming devices here; what is worse it seems to be with impunity. To much Government energy over the last five years has been spent on their survival instead of governing. Such is Australian politics...God Save Us.

     

  • Raven Posted at 8:32 AM Today

    Commonwealth bank has been doing that for over a year , it and the mortgage broker who set up my low doc , have refused , I do not have all the paperwork I signed and cannot obtain it yet I was lied to and my loan is locked up with huge exit fees that change without reason , as much as a third of the loan which can be halved with a phone call , why

     

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Comments

  • doyla66
    doyla66 Friday, 17 August 2012

    Very intersting feedback to this story. I wonder if Jafa of Melb would be saying the same thing if this person was in the Powell's shoes?

  • doyla66
    doyla66 Friday, 17 August 2012

    Mr Firstmac: knowingly concealment of true & real facts & circumstances = attempting to pervert the course of justice = felony!!!

  • doyla66
    doyla66 Friday, 17 August 2012

    Quite right, Marianna.

    I admire Ken for going public with his story in this way. It's easy to sit on the sidelines and judge him, especially if you're a younger person with tertiary financial education ie. beyond bookkeeping. Seems the elderly aren't exempt from such nasty attacks. It's disgusting.

    The big issue is First Mac refusing to allow their customers, the borrowers, access to their own forms, even with their own signatures. It's a game of bluff by First Mac to try to compensate their image after their ego deflation in the High Court. I bet they copped stick from the other lenders for messing that up for all of them.

    First Mac are operating under the old rules: any publicity is good publicity, especially in a highly competitive market when you're trying to prove to the regulators that you're ready to join the big boys of banking. Unfortunately the times are a-changing and so has the public appetite for bully boys. Clearly Kim Cannon and the First Mac team missed the memo: behaving like feudal mortgage warlords is no longer "in".

    So enough of the muscling up, First Mac, against the elderly and the vulnerable. Use your brains instead of legal brawn and start thinking about the message you're sending to the new marketplace with your distasteful conduct. Otherwise you'll be just another one of the banking dinosaurs, left out in the cold by discerning, fair practice consumers.

    And give Ken and his wife all their paperwork back, including their title deeds, and then just go away. All Australians are watching you.

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