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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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Poll: Did banks encourage fraud during boom times? Australian Brokers speak out

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It's good to see Australian Broker Online tackling the big concern sending shivers through the entire Industry.

Thankyou to their writers, editor and the brokers for providing valuable feedback and information about what was going on from their perspective.

Here are the links to the articles and comments related to the BFCSA allegations of Lo Doc Loan Fraud.


Poll: Did banks encourage fraud during boom times?

A WA broker – herself facing fraud charges – has accused the nation’s lenders of being complicit, by encouraging brokers to commit fraud to get low-doc loans approved during credit boom times.

Australian Broker is asking our readers to cast their vote. Did you see evidence of banks encouraging fraud? Yes or no? Have your say here!


TV: 'Overkill' evident in bank low-doc backdown

Brokers have labeled bank reticence to write low-docs as an example of a knee-jerk reaction in an exclusive Australian Broker TV report.

Speaking with Australian Broker TV, Mortgage House CEO Ken Sayer slammed the post-GFC bank withdrawal from the low-doc market.

"I think it's overkill to be fair. I think it was too easy in the 2003 to 2006 period, and now it has swung to another extreme."... 


Warning: low-doc furore is a ‘contagion’

A leading financial figure is concerned rumours of ‘low doc scams’ could result in a government investigation into all forms of lending.

Kym Dalton, chairman of consumer education company Credit ED, told Australian Broker Online there was a real possibility of a “contagion effect.”

Naylor plays down prevalence of fraud

MFAA's CEO Phil Naylor has discounted allegations of low doc fraud being rife in the industry.

He told Australian Broker Online "very few" of the complaints the MFAA has processed have involved fraud.
"You would expect, if low doc fraud was as rampant as is suggested, we would have been inundated with low doc fraud complaints."


I recommend you read the brokers' comments on each story.

Bank and their staff were unlikely to do something so obvious as send out memos to brokers, such as:
"Commit FRAUD any time you can get away with it with your lo doc and no doc customers and you'll reap the benefits!"

That would leave clear evidence and the banks could be held accountable for their actions if anyone asked questions later. 

It was simple. All the banks had to do was approve the loans and ensure that their liability was limited to the max in this process.

Brokers with financial literacy seem to assume everyone else has had the same education - or better. This of course is not the case, as can be witnessed by the type of clients targeted by the marketing teams at Macquarie Bank as far back as 2005 - the ARIPs - Asset Rich Income Poor. The intellectual arrogance of the financially literate never ceases to amaze me!

I also read the connected articles in the online mag and the survey.

The majority have answered YES to the fraud in lending question. Did you see evidence of banks encouraging fraud? Yes or no?

Granted this survey is open to visitors to the site as well as brokers. 

There are also quite a few who said "maybe".

The important part is that Denise Brailey and the BFCSA, plus all of our cases, are no longer being ignored.

And, for the information of Mr Naylor, the Lo Doc loan "cases" are still coming in. More importantly these "cases" are about people, stories of human suffering, families broken apart by compound bank lending practices the elderly dying from grief, shock,shame, self-blame and the attendant illnesses of financial stress. ASIC have compiled reports on the suffering of scam victims, Mr Naylor. The human reaction to loan fraud is uncannily similar. I'm sure you already know this.

There are so many more cases that lie beneath the gloss of bank success. Then there are the Lo Doc and No Doc loans that are still buried by buffer loans, refinances, quick owner liquidations and a whole lot of luck and hard work by the remaining borrowers.

With the anticipated loan rate rises, increasing unemployment and dropping values in the security properties many more of these non-compliant loans will come to light.

The good news for the lending world is that the Australian consumer protections will also ensure that these failed loans will impact the industry gradually.

The bad news for borrowers is that unless some way can be found to curtail the evidenced bank and non-bank bullying of defaulting borrowers, then, unless used competently by the borrower or with expert assistance, the present system only extends the stress and suffering. These people need help and support to negotiate the unfamiliar processes of internal and External Dispute Resolution.

The BFCSA membership are sincerely hoping that Mr Naylor and all the brokers will lend us a hand to ensure that every one of those borrowers gets through this ordeal safely. I'm sure that's what everyone wants now. 

We must keep the pressure up to force the regulators to close the gate and stop the coverups and denials.

I have enough information in my own loan application forms back from the lenders to warrant further investigation. There are complete fabrications, errors and alterations in the income details for 3 loans from a non-bank lender to raise some serious questions.

They're Lo Doc loans and the real income documents and all forms of substantiation were offered at the time of application for the broker and the lender to see and make their evaluations if they wished.

What happened next is a mystery.

The loans were approved at a higher interest rate as they were considered higher risk because the income details weren't supplied and possibly other obscured lending risk reasons. Without access to the Loan Service Calculator and Brokers' notes it's hard to say what else entered into the Credit Assessor's decision about the loans. Getting those loans on the books and achieving the higher interest rate was what the lender wanted most of all. The process and detail seem to have been less important.

One of my later loans, a refinance, had evidenced capacity to repay -or so it seemed on paper - at the time when I applied. Through a chain of extraordinary circumstances I lost that actual capacity to repay. These matters are likely to be attended to later with assistance from the regulators.

The Senate Committee are welcome to view my evidence, including a sanitised version for publication if required. I can't see why the broker should be vilified for following the instructions of the lenders. The principle remains. The lenders breached the Law, there is no doubt in my mind about that. I can imagine the shock waves in the industry when all the emails and Loan Application Forms are tabled.

Let's look at what's going on now ... from the brokers' comments.

The brokers are worried about business losses due to lenders tightening up and falling consumer confidence.

They are also frightened of some of the banks, described as "powerful".

They are frightened of prosecution and ending up in the same pickle as Kate.

Some brokers are taking the opportunity to promote their business and exonerate themselves of any risk of blame.

There is clear support, as well as the naysayers, for the BFCSA position & Kate's statements.

The cases with the BFCSA are only the shavings of the tip of the iceberg.

This is just the beginning. There is so much more to come as is the nature of revelations after a long period of hiding the evidence any way possible.

It's good that the media and the lending industry are starting to take Denise's statements seriously. Why wouldn't they with her track record. Denise has a reputation for doing her homework very thoroughly before knocking on the door of those in charge and saying "Would you please have a look at this". Denise did that years ago. Isn't it time everyone treated Denise's research with the respect it deserves?

This is not anti-bank conspiracy theory, this situation is real. Believe it or not, it makes no difference. Loan fraud is now the elephant in the lounge room of every person involved in the mortgage industry from the borrowers right to the top of the tree. Root and branch investigation is needed to establish beyond all reasonable doubt the extent of the damage and the requirements for rectification. 

With so many questions unanswered, with evidenced breaches of Law and Codes, with regulators unable to enforce the Law and borrowers threatened into confidentiality agreements and above all deathly silence from ASIC as the primary regulator for the retail lending market the only solution is a long overdue A ROYAL COMMISSION INTO BANKING.

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  • doyla66
    doyla66 Friday, 17 August 2012

    I emailed the editor of Broker news last night with a summary of our story..

  • doyla66
    doyla66 Friday, 17 August 2012

    Thanks for giving me the lead for this post, Arree.
    I wonder what Broker News would think now.
    I would also like Phil Naylor to give us a hand and encourage brokers to come forward with their evidence without fear.
    I'm unsure how brokers commissions are structured. I wonder how higher risk loans impacted broker commissions? - the pros and cons.
    The lenders would have had the most to gain by getting the loans on the books.
    In the process of my research I'm getting the feeling that I may have "nailed" the arguments in my current loan cases as well.
    I'm new all this work and feeling more like Watson than Holmes :)

  • doyla66
    doyla66 Friday, 17 August 2012

    Or more like Gladstone the dog ... :o

  • doyla66
    doyla66 Friday, 17 August 2012

    It follows logically that every Lo Doc and No Doc loan in the world is potentially affected the same way.
    It also follows, logically again, that any bank, lender, spruiker, regulator, politician, industry head, borrower ... anyone ... who says that Lo Doc loans were instituted for the convenience of borrowers (who allegedly didn't have income and other documentation) has either bought into the mythology or is lying. Lo Doc loans were created to get more borrowers in the door and onto the books and for lenders to have the option of jacking up the interest rates on the basis of increased risk, thereby advantaging themselves further through the LMI while the borrower paid the premium. Where does that leave the statements made by banks and others at the Senate Inquiry?

  • doyla66
    doyla66 Sunday, 19 August 2012

    Absolutely! The banks have blood all over their hands! They know what they do and they don't care. They set it up so that the broker or client takes the fall. The time is right to expose this industry for what it is - a wolf in Sheep's clothing.

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