Your opinion on "NEW" RAMS 90% no doc

[Peter_Tersteeg]

I'm not sure how accurate this is, but it's the one I usually use to get an estimate.

LMI Calculator:
http://www.inmortgages.com.au/mortgage-calculator.htm

It looks fairly good, but LMI rates do vary from one lender to the next. A calculator like this will give you an indication, but it's probably not going to be the end figure.

The only way to know the actual figure is to look at the lenders LMI table.

 

[grossreal]

hi all
can mortgage broker thats have rams on there books do this loan.
from one of my attached brokers he says he can't it must go thru a shop front is this correct.
also in the post it says that the loan is from 150k to 1mil but how does the lmi work if it doesn't not go over 500k.
is this product only for property up to 500k.

 

[Spectre]

grossreal

My info re rams is as follows... would be pretty sure it would apply to all the MB's out there currently (with Kristine the exception as shes a franchisee) its a cut and paste from my software
---

As of 31 December 2007 you were no longer able to submit loan application to RAMS. Please do not send any applications after this date.

Your agreements were with the old RAMS entity (RHG) and are now void. New broker agreements under the new RAMS entity (RFPL – Westpac owned) are being worked on and we aim to get them to your organization shortly

This means that all RAMS product/credit information, forms, updates etc must be removed or disabled from your software. The RAMS Broker site has also been disabled and a new one under construction.

When agreements have been finalised with your organization, RAMS will be back big and better than ever (dated 8/1)

Followed with addendum 9/1
Apologies for not including any info on Variations/Increases for existing customers. And a further apology to those that I responded to individual info regarding Increases. I have been updated as of this morning.

All existing accredited loan writers with RHG (Old RAMS) can send in increases by contacting RHG and using the existing paperwork, same process as before and same commission as per RHG agreement

Please ensure this message is placed on your software and distributed to all loan writers
---

But any new stuff seems to be shop-front until the new agreements are drawn up.

 

[Kristine..]

hi all
can mortgage broker thats have rams on there books do this loan.
from one of my attached brokers he says he can't it must go thru a shop front is this correct.
also in the post it says that the loan is from 150k to 1mil but how does the lmi work if it doesn't not go over 500k.
is this product only for property up to 500k.

Hi grossreal

I'm not sure I understand your question. The SE Pro Pack is an exception to the general RAMS lending policy in that the Lender's Risk Fee is charged in the usual way and can be capitalised to the loan provided that the total LVR does not exceed 90%

I am not sure where you have got the '$500,000' figure from?

RAMS have four Pro Pack loans. Three are full doc and one is low doc. The SE Pro Pack Risk Fee is passed to the borrower once the LVR exceeds 60%. If you borrow less than 60%LVR then there is no Risk Fee, provided that the loan is less than $1,000,000.

Hence, if you borrowed $1,000,000 against a property worth at least $1,666,667 there would be no Risk Fee.

If someone borrows $1,000,000 than the property would have to be worth at least $1,111,112 for the LVR to be 90%.

With the 80% and 85% Low Doc there is no separate charge to the borrower for the LRF as the interest rate is not discounted at commencement and although the customer earns a loyalty discount after four years, they may choose to 'switch' to any other low doc product after the two year mark. This is a standard option and provided that the property has increased in value this can be a very cost effective way of structuring the deal

Does this answer your question? Obviously, if someone has a property worth more than the $1,111,112 then the $1,000,000 loan would reflect as a lower LVR.

Equaly, the $1,000,000 ceiling applies to one security property. If a borrower can provide greater security, the total borrowings can be more.

Cheers

Kristine

 

[grossreal]

hi kristine
so this product does not have lmi it has a risk fee.
from my reading it was a lmi product and the lmi on the calculator in this post said that the max loan amount is 500k.
I understand risk fees and they re very different.
what is the risk fee fro this porduct.
can you only get this product thru a rams shop front.
it looks a very interesting product and is there any chance to asnwer the other questions I have put in this post as I have asked the brokers that I deal with and a they have rams on there books but are not rams exclusive they can't answer them.
risk fees for me were usually in commercial lending and on commercial properties is this the case for this product.
interestes in your answers.
thanks

 

[Kristine..]

Hi grossreal

The link to the LMI calculator posted by ianinvestor has nothing whatsoever to do with RAMS

Please do not confuse a gadget or generic calculator with lending policy or with how an actual mortgage insurer would assess risk.

The term 'Lender's Risk Fee' was adopted by lenders about six months ago, primarily to distinguish in the mind of the borrower the difference between insurance taken out by the lender against default by the borrower, and insurance taken out by the borrower against their own change in circumstances which may lead to their inability to service the mortgage, eg loss of income.

It is now common parlance to describe Lender's Mortgage Insurance as Lender's Risk Fee so as to lessen confusion for the borrower.


As with all insurance products, there are many parameters which influence the calculation of the insurance premium. While this is generally a Dollar against Exposure risk, there are other factors such as Post Code and type of product.

Suffice to say that the SE Pro Pack is insured once the LVR exceeds 60% and that the premium is at the expense of the borrower. The insurance is referred to as the Lender's Risk Fee.

Does that simplify matters?

Cheers

Kristine

 

[bradje]

I spoke with a RAMS officer in the city about this deal.

Had a house to offer as collateral at $650K
Wanted to buy a property on the market at $400K and develop the property
Asked for $800K.

He worked out the deal and said it could be done, but that it would cost
$21k in LMI

Does that sound right for this product?
(BTW, he wore tennis shoes in the office and kept running to the room next door to do calculations! Finally when he printed out the paperwork for me, he used paper that had already been printed on one side! Ha!

So I am assuming his calculations are a bit astray.

Anyone else have some other figures using this loan?
Thx
JB

 

[Kristine..]

Hi JB

Well, I'm sitting here in my KMart slippers, but I work the LRF out at less than $8,000 including GST and NSW Stamp Duty on the insurance premium.

$800,000 loan against $1,050,000 security = 76.19%LVR

So the full LRF could be capitalised to the loan.

Cheers

Kristine

 

[grantc]

Hi Kristine,

Can u tell me if the rams NOdoc products are still available??
I had heard they had stopped all Nodocs (even @ 70%)???

But would like to find out for sure?

Thanks
Grant

 

[grossreal]

hi Kristine..
yes it does make things a bit clearer
the only difference is that lmi is usually done thru a external insurer
but the risk fee is paid to the lender
so lmi on resi the insurer pays the lender if you default
but risk fees is a fee that the lender is taking out themself and is not covered by any insurance at all.
I understand that alot of lenders are using risk fees but thats normally for me on commercial property because lmi did not cover commercial property and is usually at around 1%.
so they are not calling it risk fee just for convenience they are in fact two very different things
one is a external insurance that you have to apply for and get approved on.
and the other is a straight out fee that you pay to the lender for risk.
so if they were going to give you the loan at 95% lvr they pay themselves 1% on the no risk part up to 80%(20%) and then they pay themselves 1% on the higher risk 15% so they are in effect paying themselves about 2.5% for the risk and thats to themself not an external insurance risk fees do not as far as I know have any insurance attached at all.
with commercial it different as the low risk lvr is 70% and it starts after 70%.
can you use this product on commercial property not resi as an investment but straight commercial

 

[Kristine..]

Hi grossreal

Well said! I appreciate the distinction you are making. As you know, a lot of the non-conforming lenders do charge a risk fee in the manner you are describing - a charge or levy to cover themselves, but due to the types of risk they may be prepared to take on eg multiple credit defaults by the borrower, they don't actually insure the loans, or because of the nature of the security ie commercial.

However, as I mentioned, the adoption of a generic use of the term 'Risk Fee' is intended to separate the type of insurance this is, from the insurance which the borrower may care to take out to protect their own interests.

In answer to you question, no, this is for residential security only.

And grantc, sorry, but the insurer of the No Doc product has not joined in with the new venture so unfortunately the No Doc 70% Option is off the menu.

Cheers

Kristine

 

[Spectre]

I spoke with a RAMS officer in the city about this deal.

Had a house to offer as collateral at $650K
Wanted to buy a property on the market at $400K and develop the property
Asked for $800K.

He worked out the deal and said it could be done, but that it would cost
$21k in LMI

Does that sound right for this product?
(BTW, he wore tennis shoes in the office and kept running to the room next door to do calculations! Finally when he printed out the paperwork for me, he used paper that had already been printed on one side! Ha!

So I am assuming his calculations are a bit astray.

Anyone else have some other figures using this loan?
Thx
JB

I wonder if all these tennis shoes and slippers have bunnies on them

Premium (by Kristine) seems pretty in line w/market LMI

Wondering why you're x-colling though...

 

[bradje]

I wonder if all these tennis shoes and slippers have bunnies on them

Premium (by Kristine) seems pretty in line w/market LMI

Wondering why you're x-colling though...

Hi Luke,
I was x-colling because I thought that otherwise I could not get the money without paying exorbitant Lending Insurance? Is that not the case here?
(I am intending to use the loan on a small sub-dividing development.)

Thx,
JB

 

[Spectre]

Kristine

Can you shed some light on something for me... I'm hoping you can clarify if they are right or wrong etc etc...

I was speaking to someone re when the rams agreements were going to be set up and they said (from what I understand) that the RAMS franchises havent yet begun to get funding from Westpac, and they are sourcing finance from the same places that Rams was getting it from originally... ideally westpac hasnt figured out themselves where they are going to get the money from, which might be why they havent passed on the broker agreements to the various aggregators / brokers etc yet. Hence the distinction between Rams and New Rams...

So is it correct that rams are lending off the remainder of the money they have, which would mean that westpac isnt funding these loans yet - i.e. wheres the $ coming from to fund the current business if it isnt from westpac

Dont know if they are right or not, just wondering.

Thanks

 

[Spectre]

JB
How small

 

[ffc1883_1996]

I'm not a broker but my local RAMS office said that Westpac are giving an incentive to customers of the OLD RAMS to refinance to the NEW RAMS. I think he told me that Westpac is going to contribute $1500 to pay for any switching fees. You need to confirm this yourself.

Does anyone have any more news on this?

Also, if an investor has made a full doc application with (old) RAMS or with Westpac in late 2007, could it effect a low doc application with (new) RAMS in 2008?

 

[Kristine..]

Kristine

Can you shed some light on something for me... I'm hoping you can clarify if they are right or wrong etc etc...

I was speaking to someone re when the rams agreements were going to be set up and they said (from what I understand) that the RAMS franchises havent yet begun to get funding from Westpac, and they are sourcing finance from the same places that Rams was getting it from originally... ideally westpac hasnt figured out themselves where they are going to get the money from, which might be why they havent passed on the broker agreements to the various aggregators / brokers etc yet. Hence the distinction between Rams and New Rams...

So is it correct that rams are lending off the remainder of the money they have, which would mean that westpac isnt funding these loans yet - i.e. wheres the $ coming from to fund the current business if it isnt from westpac

Dont know if they are right or not, just wondering.

Thanks

lukentel, read this regarding the funding of RAMS up until 4th January, 2008. :http://www.rhgl.com.au/files/Shareh...s/RAMS Funding and Annual General Meeting.pdf

In as far as current funding is concerned, the credit provider is Westpac.

The 'someone' you were speaking to obviously hasn't got a clue, but then again, it's an interesting theory that one of Australia's major banks 'haven't figured out' where they are going to get the money from to settle on applications which they are currently accepting.

Interesting scenario! Wouldn't that be major fraud? Accepting applications without the funds to settle?


ffc1883_1996, I went in to some detail regarding this a week or so ago.

This is not an 'incentive' to switch. It is as a result of commercial competition, and guidelines are that the subsidy may be for hardship cases only. Other lenders which previously offered an 'incentive' have now largely abandoned their schemes.

Hope this helps

Kristine

 

[ffc1883_1996]

Thank you Kristine, Much appreciated.

Would you have any answers in relation to the other part of my question: If an investor has made a full doc application with (old) RAMS or with Westpac in late 2007, could it effect a low doc application with (new) RAMS in 2008.

 

[Kristine..]

Thank you Kristine, Much appreciated.

Would you have any answers in relation to the other part of my question: If an investor has made a full doc application with (old) RAMS or with Westpac in late 2007, could it effect a low doc application with (new) RAMS in 2008.

Hi ffc1883_1996

Low doc applications are for those people who don't have, or who choose not to present, their financial statements.

Many people are very coy about telling other people all their personal financial details. They don't know if they can trust the broker / bank / barber with their private information and this can be very limiting for them to move forward.

Not all low doc loans require the borrower to certify that their income is derived from 'self employment', or that they have been self employed for two years or that they have ABN etc

Many of the old fashioned solicitors loans didn't require anything much, just a property and a pulse would do.

However, the answer to your question, with RAMS or with any other lender, would depend on why your circumstances have changed. If you were employed six months ago but are not now, because of ....... then you would probably be asked to justify the change in circumstances. Alternatively, you may still be eligible for full doc applications and it is wise not to assume until you have discussed this with your broker.

There are also low doc PAYG applications but these have a maximum of 70%LVR.

RAMS have a long standing policy for the other way around, that is, customers who have low doc loans can switch to full doc loans after two years if they then decide to produce financials.

So ... the answer is: It depends!

Sorry that's not much help, but I would need to know (lots) more before I could make a specific comment

Cheers
Kristine

 

[ffc1883_1996]

Yes it does help - thanks.