Banks try to hold Subprime floodgates closed

The Australian’s Anthony Klan has today reported:

One of the nation’s biggest low-doc issuers, the Bendigo and Adelaide Bank, has told borrowers they are not entitled to copies of their signed loan application forms, while other major lenders have told borrowers such documents have been “destroyed”, are “not relevant” or are “internal”.

This news comes after Consumer Advocate, Denise Brailey told a Senate inquiry on Wednesday that in the past 6 weeks she has seen 400 low-doc or no-doc loans and each one had been tampered with.

Normally, the borrowers’ income is overstated or employment status is falsified, leading many lenders to only hand over selected pages and omitting the pages containing the borrowers’ income.

There has been numerous loans extinguished by the Supreme Court where the borrower has been proven to be a victim of predatory lending. The High Court has upheld these decisions when one of the lenders appealed, potentially opening the floodgates for other borrowers’ to claim compensation.

» Lenders block borrowers’ details – The Australian, 10th August 2012.


  1. Sounds like a tactical move to delay legal process for at least another 10 years.

  2. Just been reading the comments on Denise Brailey’s blog. Some of the low doc loan borrower’s have got their LAFs and found increased income, increased assets, reduced expenses and reduced liabilities. One has even had living expenses stated as $0 and no dependants when they had 4!

    Wonder how big this will get?


    The size of ‘the bezzle’ in Australia is trillions and larceny will game the system for years even decades (It’s very profitable).

    The truth unfortunately is THE MOST powerful force. Truth is uncompromising in its outcome, just as maths & physics will prove that you will die if you jump off a 10m object onto concrete.

    Gravity never killed anyone, its the weak electrostatic force of chemical bonds between the atoms in concrete that kill you.

    Credit = deposits

  4. Some of the bigger issues hidden in ‘the bezzle’…

    $32 billion of loans were re-classified from owner occupier to investor.. WESTCRACKS first mover advantage

    Roughly $7 – 12 billion of new investor credit p.a. is ‘asset lending’ on $120 billion of existing subprime NO DOC/LOW DOC NANNA NINJA loans where the annual credit is created is ONLY created to pay the interest on the already existing debt so that the loan does not default… YET

    The actual credit created to BUY and LIVE in a dwellings is negligable without bribes and those who swallow the bribes are the patsies in a parimutuel gambeling game

    The RBA lowers effective mortgage rates and all the ‘normal families’ (I use that term loosely) take the oportunity to reduce the size of their outstanding loans… That sensible action from 60% of the genuine debt burdened owner occupiers reduces NET aggregate credit growth.

    This will all end badly in the aggregate and we are in the frount row seat

  5. Be interested to know the amount of reclassification from investor to owner occupier. One of the big mortgage broker plays when a client doesn’t naturally qualify is to declare the loan as an investment loan, add the rental return to the borrower’s annual income to get the loan across the line. As settlement approaches they change the purpose of the loan back to owner occupier and no questions are ever asked. Mortgage brokers are the ultimate leaching pox on society.

  6. Assumed rentals + aggressive accelerated depreciation + NG tax returns etc

    True economic equity more worthless than Babcock & Brown X 10000

    As J.K. Galbraith observed… is a period, incidentally, when the embezzler has his gain and the man who has been embezzled, oddly enough, feels no loss. There is a net increase in psychic wealth.) At any given time there exists an inventory of undiscovered embezzlement in – or more precisely not in – the country’s business and banks.

  7. Peter_W – your work is brilliant! Keep it up. And I agree 100% with your aggregate credit analysis (another Prof Keen fan no doubt).

    Bob (Bubblepedia)

    PS please come and post on your technical stuff. Really!

  8. When we signed our mortgage papers earlier this year, I asked the ANZ bank manager to give us a photocopy. His behavior immediately shifted to a bit odd- he ignored me and started to obviously destract us, ask questions about the weather , the new house etc. and it worked, as we went to leave. Then I realized my request was ignored and asked again. He left the room and came back saying the photocopier was on the blink and then shuffled us out of the door. I would say this is a standard response when asked for a copy of mortgage documents.

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