Another Lodoc lender tightens the noose

[Qlds007]

SGB have just announced effective from 19 September 2009, all Low Doc Home Loan applications must now be supported by Business Activity Statements (BAS) for the last 12 months, the last statement being no more than 3 months old at the date of application.

This is in addition to existing Low Doc documentation requirements.

For applications received prior to the 19th, these can be assessed under the previous criteria i.e. Business Activity Statements will not need to
be supplied. However, any new applications received from the 19th will require Business Activity Statements to be supplied as a policy
requirement.

Please note that no policy exceptions will be considered - if applicants are unable to provide BAS statements for the last 12 months per this
new policy requirement, then the application cannot be considered as a Low Doc and will be required to be processed as a fully assessed loan
with full financials and income details provided.

Looks like noose is tightening further.

 

[Rolf Latham]

joining CBA to become a lite doc at best .


ta
rolf

 

[Qlds007]

Agree Rolf and from what i hear they will not be alone.

 

[Bradsdad]

Been trying to contact a client who's been fluffing around last week or so. Best he be available tonight/tomorrow morning. I assume turnaround times will blow out with the last minute mad dash.

 

[Aaron Sice]

but there's nothing wrong with this - providing BAS statement is a lot less misleading than tax assessments.

trust me....!

 

[BayView]

SGB have just announced effective from 19 September 2009, all Low Doc Home Loan applications must now be supported by Business Activity Statements (BAS) for the last 12 months, the last statement being no more than 3 months old at the date of application.

This is in addition to existing Low Doc documentation requirements.

For applications received prior to the 19th, these can be assessed under the previous criteria i.e. Business Activity Statements will not need to
be supplied. However, any new applications received from the 19th will require Business Activity Statements to be supplied as a policy
requirement.

Please note that no policy exceptions will be considered - if applicants are unable to provide BAS statements for the last 12 months per this
new policy requirement, then the application cannot be considered as a Low Doc and will be required to be processed as a fully assessed loan
with full financials and income details provided.

Looks like noose is tightening further.

It's a contradiction in terms now.

Lo Doc - please provide all your financial records for the last 12 months.

Sounds more like a Full Doc now.

For those of you with poor financial positions (and records), now is the time to really improve them, or you will be shut out of the game.

 

[steveadl]

It's not always a case of poor financial positions, it's a case of cashflow vs profit. I know what debt I can afford with this cashflow, the bank would disagree and say I can only afford so much with this profit.

 

[Rockstar]

Just heard from my broker that WBC have also joined StG with the same policy - effective from tomorrow. Lodoc days are over - for the time being.

 

[Bradsdad]

As long as they keep the affordability statement I'd be happy. this is what differs them apart from most at a competitive rate of interest.


Regards
Steve

 

[Qlds007]

Hi Steve

Yes I agree with you i always like the Dragon affordability statement.

 

[BayView]

It's not always a case of poor financial positions, it's a case of cashflow vs profit. I know what debt I can afford with this cashflow, the bank would disagree and say I can only afford so much with this profit.

I agree with you here Steve.

To elaborate my meaning of a poor financial position - it is one which THE BANKS deem to be not one that they would lend you money against.

For example, we have been asset rich and cashflow poor on numerous occasions over the last several years, but still managed to decrease debt, increase equity and cashflow.

In terms of our savings records and accumulated wealth in comparison to our meagre incomes, we believe we had done quite well.

Banks didn't think so on a number of occasions.

As a generalisation, I'd say that now, because of the financial climate (and it seems to be worsening from a borrowers' viewpoint), the majority of folk are in weak financial positions - even with higher incomes.

This is due to their spending/savings patterns and assets v debt.

 

[Rockstar]

Can someone confirm this information I received from a broker. WBC lodoc 80% now require BAS - otherwise 60% is the limit without BAS

Westpac have now made changes to their Low Doc policies - effective from yesterday.

Any pre-approvals in Westpac’s system have to be converted to full approvals by this coming Wednesday.

 

[Rolf Latham]

diff interps as always till the dust settles

Effective 23rd

For ALL Lo docs, not just > than 60 % like CBA

Pre approvals are good for the "standard " period, though Iwould not want to push that friendship, since they have been looking to decline loans for anoyhting like half a good reason

ta

rolf

 

[Rockstar]

So you can't get any lo doc loan now from any lender (no matter what LVR) without showing BAS? This is what I am being told.

 

[Qlds007]

Rockstar

No that is not quiet right. Most Yes - All NO.

 

[Peter_Tersteeg]

So you can't get any lo doc loan now from any lender (no matter what LVR) without showing BAS? This is what I am being told.

There's still a few out there, but I suspect more will require BAS before the end of the month.

Some of the specialist lenders probably won't change their requirements in the near future, but you're already paying a premium for these lenders.

 

[Rockstar]

Rockstar

No that is not quiet right. Most Yes - All NO.

So CBA still do lodoc below 60% without BAS but may ask for them if your income declaration is over 75k

All other majors need BAS?

 

[BoatBoy]

The latest from Bill Zheng

Hi
The time has come! All lenders (banks or non-banks) are moving very fast to close the window of low-doc loans in Australia.
Just in the last few days, quite a few significant changes have been announced simultaneously from different lenders. If you hold one or more low-doc loans, or thinking about purchasing another property using a low-doc loan, you need to know the following:
• It is getting very difficult, if not impossible, to refinance a low-doc loan at 80%LVR.
• It is very difficult, and almost impossible for some lenders, to get finance for low-doc loans if you hold the property in a company or a trust.
• For most lenders, low-doc income needs to be backed by your last 6-12 months of BAS statement.
• Low-doc loans at 80%LVR are still available for purchasing a property, but it’s getting extremely difficult for refinance.
• Low-doc loans will be sitting at 60%LVR for a while, and it is possible to be discontinued entirely in the near future.
• There are many other small changes that may or may not affect you personally.
These changes didn’t come to our team as a surprise. If you came to our seminars in the last 2 years, we have already predicted this based on the US experience.
There is always a bright side of everything, if low-doc loans are on the way out (at least high LVR ones), lenders will make an effort to help the low-doc borrowers to convert their loans into full-doc loans, as it will be good for their loan book, and it is definitely good for you.
While we can’t guarantee that we can definitely convert your low-doc loans into full-doc loans, we have been working very closely with some lenders to help make this conversion possible for our clients. Right now the interest rates between full-doc and low-doc are very similar; many low-doc borrowers do not see the need to convert their loans. But this won’t last very long; in the long run the low-doc loan interest rate will always be much higher than the same full-doc loan, when it does become higher, it will be much harder to switch over. Hence this is probably the best time to make a switch from low-doc to full-doc if you can.
So if you or any of your friends and family have got one or more low-doc loans right now, or thinking about purchasing properties using low-doc loans in the future, please reply to this email or contact our office on 03 9868 7500. We will either help you convert them into full-doc loans immediately, or let you know how you can set yourself up to do so ASAP.
Kind regards,
Bill Zheng
Investors Direct Financial Group

 

[Rockstar]

SO will this affect house values? What % of the loan market are lodoc?

I would imagine the fact that finance is tighter will mean less properties being purchased = demand falls. On the other hand it also means less new properties being constructed = supply is restricted further. Will these balance out to nil effect?

Any thoughts?

 

[Spectre]

cycles and cycles.