I'm confused - meaning of income for lo doc loans
- Thread starter Nth Brisbanite
- Start date
Gee, Well, thanks for that Steve
You've now scared the wits out of me!
But, you know, and with no disrespect, but if you had been my broker (instead of Alan, back in 2002 when I bought Myrtle Cottage), I would not have done a third of the things I've done since then.
In fact, if you had worked for the Bank, back in 1994 when I bought the Mission Brown Single Bowl Sink wonder, I would have not bought any of my investment properties at all.
So it's a good thing I didn't know these things and come from the 'let's give it a go' school of thought.
And obviously my various lenders think the same way: It's all Nation Building stuff and as far as they are concerned (and I have a 'few' loans now with a 'few' different lenders) it's mortgage backed security for them and if I reckon that I can meet the payments then, ergo, I can meet the payments.
And I notice in your transcripts that most of the problems were because of an average of three years of no tax returns, and that many of the brokers were the tax agents of the recalcitrant borrowers.
For a recovery of $23,000,000 we really aren't talking about the income that's declared on a self certificated loan application, are we? We are talking serious underestimation of income on tax returns, or the lack of tax returns, or the non-payment of with holding tax from employees salaries etc etc
Steve, the answer as far as you're concerned is simple: If you don't like self certificated products then don't write the applications. Stick to full doc PAYG customers and you will be happy.
For me, if other people - bank staff, brokers, solicitors - hadn't gone out of their way to help me realise my dreams, the dreams would have withered on the vine.
It's all horses for courses and everyone is different.
C'est la vie!
Kristine
You've now scared the wits out of me!
But, you know, and with no disrespect, but if you had been my broker (instead of Alan, back in 2002 when I bought Myrtle Cottage), I would not have done a third of the things I've done since then.
In fact, if you had worked for the Bank, back in 1994 when I bought the Mission Brown Single Bowl Sink wonder, I would have not bought any of my investment properties at all.
So it's a good thing I didn't know these things and come from the 'let's give it a go' school of thought.
And obviously my various lenders think the same way: It's all Nation Building stuff and as far as they are concerned (and I have a 'few' loans now with a 'few' different lenders) it's mortgage backed security for them and if I reckon that I can meet the payments then, ergo, I can meet the payments.
And I notice in your transcripts that most of the problems were because of an average of three years of no tax returns, and that many of the brokers were the tax agents of the recalcitrant borrowers.
For a recovery of $23,000,000 we really aren't talking about the income that's declared on a self certificated loan application, are we? We are talking serious underestimation of income on tax returns, or the lack of tax returns, or the non-payment of with holding tax from employees salaries etc etc
Steve, the answer as far as you're concerned is simple: If you don't like self certificated products then don't write the applications. Stick to full doc PAYG customers and you will be happy.
For me, if other people - bank staff, brokers, solicitors - hadn't gone out of their way to help me realise my dreams, the dreams would have withered on the vine.
It's all horses for courses and everyone is different.
C'est la vie!
Kristine
Hi Rixter, I'm meeting with my MB this arvo to discuss this issue. I've just Googled Intellichoice and can't find their current interest rates. Can you help pls?
No offense taken Kristine. My post was in relation to concerns raised in this particular post. I'm more than happy dealinmg with Full Doc. Lo-Doc, No Doc, Lite Doc or whatecev the case may be but that's my business. if a prospective clients asks me a question I will give them an honest answer or refer them in the right direction to obtain the answers needed. I may miss opportunities now and then to write business due to not glossing over such questions but at least I know my butt is covered as is that of my clients.
I just had an example last month where an assessment officer (won't name lender) told me to just declare "x" figure under the sole directors income instead of under the hybrid trust. The client was unhappy to do so as he was only a 10% benificiary. The deal didn't proceed and the client is more than comfortable with that (I won't go into full working of the deal). On the other hand I know of brokers who would just alter the figures without explaining it to the client and get the deal through. A great result for the broker who gets paid and in the eyes of the client a great result as his dreams hadn't withered on the vine as you would put it. If for some reason something went wrong with the deal at a later date (however slim it maybe) and the client became aware of my actions I wouldn't worried about vines but frantically trying to find a paddle. I know of one broker still trying to find that paddle as he'd declared far to much income for a client and stated the client was S/E just to get a deal through. The client was in fact salaried at that point in time and has ceased running his business. When it came to the client selling a property to to a marital dispute the proverbial hit the fan. Lucky for MY client that after 3 weeks of efforts I managed to get him out of the hole the "dream weaver" had dug.
Anyway each to their own and I'm assuming that those reading this post are here for information relating to it not squabbles over who's bat it is.
Regards
Steve
Here's there website Sailor.... http://www.intellichoice.com.au/
Ask for Darin or Jo.
Hope this helps.
Personally, I think people overcomplicate the issue.
If you were to do your household/business budget for next year, what number would you put in the income column? That's the number you wack in your Lo Doc Declaration
If you a tempted to put a larger number in a declaration, your actions are falling somewhere between fraudulent and stupid
If you were to do your household/business budget for next year, what number would you put in the income column? That's the number you wack in your Lo Doc Declaration
If you a tempted to put a larger number in a declaration, your actions are falling somewhere between fraudulent and stupid
Exactly, Token Funder
And that's all that anyone does!
Well said. Keep it simple is always good advice.
Cheers
Kristine
And that's all that anyone does!
Well said. Keep it simple is always good advice.
Cheers
Kristine
Hi folks
Another issue with Lo-Doc loans is that when declaring an income, you generally need to either lie about the income you are going to get, or lie about the field of business in which your ABN is registered. That is, if you register an ABN and you are a PAYG earner then the bank will not approve the loan if the nature of business is described as 'property investment'....or something similar. You would need to make something up to get the deal over the line.
One thing that frustrates me is that it appears that a PAYG earner earning $75k pa will not get a deal over the line but a SE person earning $75k pa will get the deal over the line.......Can a MB clarify whether this is the case, all else being equal ?
One option is no doc, but talking with a MB today, they advised there is basically no such thing available at the moment, and if there is, you will pay an astronomical interest rate...
Cheers
Another issue with Lo-Doc loans is that when declaring an income, you generally need to either lie about the income you are going to get, or lie about the field of business in which your ABN is registered. That is, if you register an ABN and you are a PAYG earner then the bank will not approve the loan if the nature of business is described as 'property investment'....or something similar. You would need to make something up to get the deal over the line.
One thing that frustrates me is that it appears that a PAYG earner earning $75k pa will not get a deal over the line but a SE person earning $75k pa will get the deal over the line.......Can a MB clarify whether this is the case, all else being equal ?
One option is no doc, but talking with a MB today, they advised there is basically no such thing available at the moment, and if there is, you will pay an astronomical interest rate...
Cheers
No Doc 9.5% doesnt sound astronomical to me.
Hiya
One of my fave no doc funders has stopped taking business.
They were doing 80 % LVR at 9.94.............but alas no more...
The funder was allowing MGIC to underwrite the deals.....
MGIC have had a reduction in their risk rating ( or so im told) ..............
I wonder if this will have an effect on high lend lo doc products currently underwritten by MGIC, such as Westpac Warehouse Funded Rams lo doc 90
ta
rolf
One of my fave no doc funders has stopped taking business.
They were doing 80 % LVR at 9.94.............but alas no more...
The funder was allowing MGIC to underwrite the deals.....
MGIC have had a reduction in their risk rating ( or so im told) ..............
I wonder if this will have an effect on high lend lo doc products currently underwritten by MGIC, such as Westpac Warehouse Funded Rams lo doc 90
ta
rolf
As I have mentioned before on this thread, there is no clear definition of income. Therefore, if you put down an amount which you think is income, how can you be telling a lie? An example of confusion is whether income is past, present or future. If you plan to develop a property and sell it in the near future then I would classify that as future income and include it as part of your income in a lo doc declaration. After all, isn't that what lo docs are all about - to indicate to the banks what your current financial situation is? You don't have to be in business to get a lo doc loan, you can also be a PAYG earner.
It is true that some banks accept "property investor" as the nature of business while others don't care what you write down. One bank doesn't even ask you the nature of your business, so how can you be telling a lie?
Details pretty please
www.mortgagestreet.com.au.
They fund their No Doc Investment loans from the CBA.
Yes NO Doc. I Believe they asset lend up to 90% so the MB tells me.
Thanks Rixter.
Just as a side note re the names.
If you are going to set up a company/trust - whatever... with a company name dont go calling it for example - SS Development Trust. If you end up MI'ing..... when the MI looks at it a lot of em arent too keen on lending to a development company on a low doc.
Point being you would have been better to call it SS Trust, and leave the developments bit out of it.
If you can pull it off on a full doc or commercial its not as big of an issue but when it gets to low docing on residential, you're really limiting your options.
