Alleged Mortgage fraud leads WBC, ANZ and CBA to slow lending to non-residents
ANZ and Westpac announced on Monday that they are investigating a number of loan applications from borrowers who have listed foreign income sources. They state that they believe some of these applications may have included false declarations writes Sam Green, Advisor at Options Educator, TradersCircle.
The alleged fraudulent activity was revealed as a result of internal investigations from the banks.
ANZ and WBC state that they have each approved “hundreds” of loans backed by potentially fraudulent Chinese income documentation, as well as potentially fraudulent passports and other identification material. The documents were allegedly manufactured with the help of unconscionable mortgage brokers.
Lindsey David, from LF Economics, states that Westpac and ANZ are likely not alone in issuing these loans, “We found evidence of 21 Australian lending institutions with evidence of people’s loan application form being fudged,” he said.
Both banks have stated that these loans are performing better than the average of their wider mortgage portfolios, with the default rates on Australian home loans already some of the lowest in the developed world.
ASIC has confirmed that it is now investigating the allegedly fraudulent documentation, with a spokesperson stating that ASIC “is looking at the situation” after receiving information from the banks.
The allegedly fraudulent activity has led WBC, ANZ and CBA to restrict lending to foreign investors, with the Bendigo and Adelaide Bank today confirming that they too have instructed their mortgage managers and brokers to immediately stop lending to foreign borrowers.
Adelaide Bank’s largest business partner, Mortgage House has stated that it has declined foreign business, because according to their Chief Executive, Ken Sayer, “We did not want the grief. I knew this was coming. It was a no brainer,”
Chinese property investment in Australia doubled from 2014 to 2015, and experts are expecting continued growth. Some experts believe that the large increase in the volume of foreign borrowers has lent itself to a similar increase in fraudulent activity.
These new revelations come at a time when the microscope is over the housing sector, with several recent ASIC investigations against mortgage brokers, allegations of embezzlement at LJ Hooker franchises, and talk of an end to negative gearing from the Federal Labour Party for their election campaign.