The Australian Sub-Prime

[saiter]

A WA mortgage broker who got rich by "fudging figures" has blown the whistle on the banks that conspired in Australia's own sub-prime mortgage scandal.

In 2007 Kate Thompson was WA mortgage broker of the year. Now she is facing fraud charges.

It is alleged Mortgage Miracles, in Canning Vale in Western Australia, obtained investment loans for customers by using falsely inflated earnings and assets.

Ms Thompson admits that is exactly what she did.

"I would get upfront commission, I would get a trailing commission. I was probably earning about $5 million a year. It was great. It was wonderful. But it was all a lie," she said.

But she was not alone.

"Hook me up to a lie detector test and hook them up. I'll lay my evidence on the table. They will fail a lie detector test miserably. They are corrupt. They are protecting each other," Ms Thompson said.

Along with similar claims before a parliamentary inquiry in Canberra last week, her evidence has the potential to rock the finance industry.

"Through a series of emails from banks to brokers how to get their deals across the line, make the deal fit. They targeted older people, people on carers allowance, age pensions," Denise Brailey, from the Banking and Finance Consumers Support Association, told the inquiry.

http://www.abc.net.au/news/2012-08-13/mortgage-broker-blows-whistle-on-big-banks/4195920

It seems as though the Australian banks have been engaging in the same practices as their US counterparts. They have supposedly been involved in issuing loans to applicants who have little to no income after co-operative mortgage brokers falsified the applicants details.

I believe that this was presented (and is still being presented) to the Senate during the past week by Denise Brailey, a financial/RE consumer advocate. It is not only interesting to find out that our banks have been engaging in fraud, but also that our government is now holding ~$50 billion in RMBS - 10% of which could be fraudulent and/or worthless.

 

[numbercruncher]

And house prices would of only gone up half as much if it wasnt for these fraudsters ......

Maybe some of them will get a prison sentence, not much different to robbing a bank is it?

 

[white_goodman]

And house prices would of only gone up half as much if it wasnt for these fraudsters ......

Maybe some of them will get a prison sentence, not much different to robbing a bank is it?

surely theres some self responsibility on the sub primees... is it the crack dealers fault the crack addict keeps comin back?

 

[sinner]

surely theres some self responsibility on the sub primees... is it the crack dealers fault the crack addict keeps comin back?

I assume that means you haven't read this?

http://www.aljazeera.com/indepth/features/2012/07/201273091920225735.html

:

 

[white_goodman]

I assume that means you haven't read this?

http://www.aljazeera.com/indepth/features/2012/07/201273091920225735.html

:

ha interesting, doesnt really effect the point im making

 

[prawn_86]

ha interesting, doesnt really effect the point im making

I do agree, but with no compulsary financial education required at any stage in life, if a banker tells you you can afford X, why should the average Joe question it? If the banker/broker then illegally changes the forms to inflate income without your knowledge surely that is illegal...?

 

[white_goodman]

I do agree, but with no compulsary financial education required at any stage in life, if a banker tells you you can afford X, why should the average Joe question it? If the banker/broker then illegally changes the forms to inflate income without your knowledge surely that is illegal...?

im not excusing the brokers for illegal practice, what im saying is we cant have a society where we excuse the bad behaviour just due to the fact they cant use a calculator

 

[young-gun]

im not excusing the brokers for illegal practice, what im saying is we cant have a society where we excuse the bad behaviour just due to the fact they cant use a calculator

Banks were/will be wreckless, and people were/are stupid.

 

[saiter]

surely theres some self responsibility on the sub primees... is it the crack dealers fault the crack addict keeps comin back?

I think the point was that the applicants had no idea that their applications were made fraudulent after they had signed the contract.

I think the bigger issue here is: What would happen if all of these debtors could no longer make the repayments and were to file for bankruptcy?

AFAIK, Australian mortgagees do not have their mortgage debts forgiven (unlike in America) so this would mean that the banks would still make some sort of return. The problem that I see is that they won't be making any return until the mortgagees have a satisfactory level of income; and since many of them are seniors, pensioners or close to retirement, their only source of income would be their pension allowance or superannuation funds. Either these funds will be used to repay the banks (and we will have a heap of homeless/poor seniors) or the banks will never get all of the money that they expected to receive. If the latter were to play out, then we may see the banks play the "too big to fail" card and government may head in the same direction as the US.

 

[white_goodman]

I think the point was that the applicants had no idea that their applications were made fraudulent after they had signed the contract.

I think the bigger issue here is: What would happen if all of these debtors could no longer make the repayments and were to file for bankruptcy?

AFAIK, Australian mortgagees do not have their mortgage debts forgiven (unlike in America) so this would mean that the banks would still make some sort of return. The problem that I see is that they won't be making any return until the mortgagees have a satisfactory level of income; and since many of them are seniors, pensioners or close to retirement, their only source of income would be their pension allowance or superannuation funds. Either these funds will be used to repay the banks (and we will have a heap of homeless/poor seniors) or the banks will never get all of the money that they expected to receive. If the latter were to play out, then we may see the banks play the "too big to fail" card and government may head in the same direction as the US.

doesnt matter if they knew it was fraudulent, if the mortgage repayment per week is $1000 and they only earn $900 a week, they should know they might be biting off more then they can chew.Likewise ud imagine the banks would have a suitable claim against fraudulent mortgage brokers (under the assumption the banks didnt know - which i doubt) Also most states in the US ARE recourse loans despite the myth that is sold across the interwebz

http://www.forecloseddreams.com/recourse_states

note Florida and Nevada are RECOURSE states

The myth that its always the banks or the brokers that are the only greedy ones gains too much traction imo..

 

[Glen48]

White-Goodman,
You are correct saying most should be able to work 900 is to short however a lot some how assumed the FHOB would some how end up in their pockets as cold cash and they could use that most don't know any thing about buying a house and just sign where they are told to do.
They do know a house will double every 7 yrs so all they have to do is hold on for a few years and wait.

And many are about to find out the above is not true, I am lead to believe bankruptcy only lasts for 5 yrs by then house prices will still be dropping so the home owner now can start again once the bottom is reached.