Finance/return of lo doc/no doc

[MTR]

This is one for all the brokers....

Recently new lo doc products have come into play, however not the same product as lo doc/no doc products I was using prior to GFC. Additional conditions apply which make it not as attractive.

Would like some input on whether you are seeing a shift in the finance/banking world and that we may see a similar product to the lo doc/no doc available prior to GFC???

Thanks

MTR

 

[Terry_w]

No, these would not be possible under the NCCP/

 

[Marty McDonald]

Not likely to be as easy / cheap as pre GFC ever.

The lenders reluctance to this lending is one issue but even if thing loosened up the NCCP legislation also requires there must be reasonable steps to verify income ie some verification.

Things like accountants declarations or %'s of gross business turnover (verified via BAS or bank statements) can be used in some cases which is getting a bit looser.

 

[Rolf Latham]

No significant
Changes likely for regulated loans

Ta

Rolf

 

[MTR]

How disappointing.

 

[D.T.]

Perhaps should have structured properly from the start so that they wouldn't be needed?

 

[MTR]

Things like accountants declarations or %'s of gross business turnover (verified via BAS or bank statements) can be used in some cases which is getting a bit looser.

Working on this, can get accountant declaration and have a trust and company where I can start showing profits to improve serviceability.

Just going to have to work harder I think

 

[Peter_Tersteeg]

No doc loans still exist! I wrote one a few weeks ago, super easy!

It was for a commercial property. They don't exist residential space for the NCCP related reasons previously stated.

 

[MTR]

No doc loans still exist! I wrote one a few weeks ago, super easy!

It was for a commercial property. They don't exist residential space for the NCCP related reasons previously stated.

So commercial does this include developing/4 units etc.

This would be at a very high interest rate, higher LVR, interest payable from the start?? that is if developing

Thanks
MTR

 

[Terry_w]

So commercial does this include developing/4 units etc.

This would be at a very high interest rate, higher LVR, interest payable from the start?? that is if developing

Thanks
MTR

A company borrower will do the trick.

 

[Rolf Latham]

A company borrower will do the trick.

but not if the primary and specific purpose of creating the entity under financier advice as to get around the NCCP ?

ta
rolf

 

[Terry_w]

but not if the primary and specific purpose of creating the entity under financier advice as to get around the NCCP ?

ta
rolf

I dont know Rolf - I can't see anything in a quick look at the NCCP about this. It would be pretty unusual for someone to create an entity with the sold purpose of getting around the borrowing rules.

 

[Peter_Tersteeg]

Without looking at any of the NCCP legislation (I'm tired enough right now), my understanding has always been that for regulated lending (essentially residential), NCCP applies. In turn this means that it must be verified that the borrower has the capacity to pay the mortgage. The borrowing entity is irrelevant, be it person, trust or company.

Certainly not a legal opinion on my part, more just my general understanding and I feel it errs on the side of caution.

Residential security = NCCP = Verify capacity to repay

 

[Marty McDonald]

The big lenders don't worry about that Terry but your smaller lenders and private funders definitely do. I had a $4.3 mil low doc style loan for a 15 unit development almost set a few years ago and the only problem was the unencumbered land was owned in the wife's personal name. The funders lawyers refused to give advice that it wasn't covered by NCCP even though the borrowers had previous commercial development experience. The borrower was a company and the blatantly commercial nature of the transaction.

I even spoke to ASIC about it for clarification. Seek legal advice we can't advise you blah blah blah. We thought of increasing the loan to $5 mil (the cap for NCCP to apply) but the private funders interest waa pre paid. Deal killer.

 

[Qlds007]

Just done a private deal this morning where the lender declined it initially as the title was in the personal names but if they transferred the Title to a company name they would do it.

The Commercial lawyer they consulted (A leading lawyer in the Private Mortgage industry( advised them no issue at all and the deal was approved.

Cheers