Liar Loans

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<p dir="LTR">ASIC has banned former National Australia Bank branch manager, Rabih Awad, from engaging in credit activities and providing financial services for seven years.</p>
<p dir="LTR">The ban is the result of an on-going ASIC investigation, following a breach report lodged by NAB alleging that bank employees in the greater western Sydney area were accepting false documents in support of loan applications and falsely attributing loans as having been referred by NAB introducers in order to obtain undue commissions.</p>
<p dir="LTR">ASIC found that Mr Awad recklessly gave NAB information and documentation in loan applications that was false or misleading. </p>
<p dir="LTR">Mr Awad was found to have given NAB false payslips, letters of employment, and entered false referee contact details in NAB’s lending systems in multiple home loan applications.</p>
<p dir="LTR">A majority of the false documentation submitted to NAB by Mr Awad was provided to him by a real estate agent who was previously registered as a NAB Introducer.</p>
<p dir="LTR">ASIC also found that:</p>
<ul>
<li>Mr Awad received the false documents directly from the NAB Introducer rather than the customer, in violation of NAB’s Introducer Program; and</li>
<li>on occasion, Mr Awad received false documents from the NAB Introducer via email to his personal email account, before forwarding the documents to his NAB email account and subsequently attaching them to various customers loan applications.　</li>
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<p>Mr Awad has the right to lodge an application for review of ASIC’s decision with the Administrative Appeals Tribunal.</p>
<p>On 16 November 2017, NAB announced a remediation program for home loan customers after an internal review, prompted by whistleblower reports it had received, found that some home loans may not have been established in accordance with NAB’s policies.</p>
<p dir="LTR">NAB identified that around 2,300 home loans since 2013 may have been submitted with inaccurate customer information and/or documentation, or incorrect information in relation to NAB’s Introducer Program.</p>
<p>Mr Awad’s banning follows the permanent bans of former NAB employees, Danny Merheb and Samar Merjan (also known as Samar Awad) from engaging in credit activities and providing financial services.</p>
<p><span>It should be noted that another banker named Rabih Awad, who is a mobile lender at CBA, is not the same Mr Rabih Awad as mentioned in the ASIC judgement, according to a CBA spokesperson.</span></p>
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Reckless liar loan fraud prompts ASIC ban on former NAB branch manager

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<p>Westpac Group is set to use three leading global credit agencies to track liar loans to boost its loan scrutiny.</p>
<p>Westpac will advise its borrowers' their credit information will be soon be screened by Equifax, Experian and illion, which is formerly Dunn and Bradstreet Australia.</p>
<p data-gtm-vis-first-on-screen-7770372_137="4438" data-gtm-vis-total-visible-time-7770372_137="4000" data-gtm-vis-has-fired-7770372_137="1">The Australian Financial Review said it will allow Westpac and its subsidiaries, Bank of Melbourne, St George Bank and BankSA to review all debts of the applicants, including drawn lines of credit, rather than just credit inquiries, and any defaults.</p>
<p>Equifax, which is headquartered in the US, claims its collects information on more than 800 million individual consumers and 88 million businesses worldwide.</p>
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<div>The Australian Prudential Regulation Authority and the federal government have been pressing for better credit checking to reduce lenders' exposure to defaults.</div>
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<div>One in five property borrowers are exaggerating their income and nearly half understating their spending, according to recent analysis of loan applications by online property lender Tic:Toc Home Loans.</div>
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<p>The issue of liar loans' flared when investment bank UBS estimated last year about 30 per cent of home loans could be affected.</p>
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Westpac moves to thwart property liar loans with international credit checks

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<p>Liar loan applications constituted alarmingly high volume in the second half of 2017 loan application, according to analysis of by the online property lender Tic:Toc Home Loans.</p>
<p>Analysis of the applications revealed about 20 per cent overstated their income, typically by around 30 per cent.</p>
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<p>Some 50 per cent of applications indicated their expenses were lower than the commonly accepted University of Melbourne Household Expenditure Measure, also by around 30 per cent.</p>
<p>The data was based on applications received since last July.</p>
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<p>Salaries are often overstated by borrowers using a range of tactics, such as over-stating bonuses or, for variable income earners, using peak rather than average income.</p>
<p>The issue of exaggerating income and understating their spending comes despite the Australian Prudential Regulation Authority crack down on lenders' assessment of borrowers' genuine capacity to repay debt. </p>
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<p>Tic:Toc uses Yodlee, a sophisticated, high tech gatekeeper that digitally validates borrowing power, credit checks, personal ID and all other financials.</p>
<p>Anthony Baum, founder and chief executive, said the loan applications are generally representative of larger lenders in terms of location, borrower and loan size.</p>
<p>Baum told Fairfax Media in many cases applicants did not have to over-state their income for the required loan.</p>
<p>It targets buyers that have 20 per cent deposits with highly competitive rates and no lending fees. </p>
<p>Its loans range from about $60,000 to $1.3 million.</p>
<p>The latest analysis was based on a smaller sample than UBS's survey which highlighted concerns last September. The UBS <span>survey of over 900 mortgage applications originated over the last 12 months revealed that about one third of home loans contained information that was not accurate.</span></p>
<p>Martin North, principal of Digital Finance Analytics, an independent consultancy, recently noted standards had slipped because of lenders' readiness to "jump over backwards" to increase business.</p>
<p>North added the government's widely used 'Household Expenditure Measure', which uses family size, location and lifestyle to estimate living expenses, was "very low", particularly for high costs cities like Sydney and Melbourne.</p>
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<p>Wayne Byers, the APRA chairman, has requested lenders collect more realistic living expenses from borrowers.</p>
<p>UBS estimated $500 billion of home loans were "liar loans", the researchers, Jonathan Mott, Rachel Bentzvelen and George Tharenou wrote.</p>
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