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Aussie Sub-Prime mortgage rort revealed
sLaps_Forehead
Brisbane, Queensland
6064 posts
11:38am 14/08/12 Permalink
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11:38am 14/08/12 Permalink
sLaps_Forehead
Brisbane, Queensland
6065 posts
11:44am 14/08/12 Permalink
BOOST
Brisbane, Queensland
505 posts
That's really interesting.

I wonder if they did the same thing as the US by packaging up these s***** low doc loans in with good loans to get a decent credit rating, then selling them off? If that happened it could have some nasty follow on effects.
12:22pm 14/08/12 Permalink
thermite
Brisbane, Queensland
10009 posts
I am s*** at economics. I don't know what low doc loans are, I've never heard of sub prime. I get the impression that people use these terms assuming they are generally understood. Yet, I have been approved for 3 mortgages, and I would never sign up for anything without having worked out my repayments, and considered the loan from various perspectives and made a plan. So what the hell is wrong with these people then? Seems like they have been given everything they want, then they f*** up their own eyebrows, and go on TV b****ing about it.
Did they never even go on the banks' websites and do the mortgage calculators to even get a sense of where they stand?
12:37pm 14/08/12 Permalink
natslovR
Sydney, New South Wales
7880 posts
CBA started bundling mortgages and selling them off again just recently:

http://www.foxbusiness.com/news/2012/08/02/commonwealth-bank-australia-to-issue-first-rmbs-in-15-months/

Don't worry, this isn't the same as last time, these are rated AAA, oh wait...
01:20pm 14/08/12 Permalink
Pinky
Melbourne, Victoria
13577 posts
Low doc = limited documentation. I.e., you're self-employed so you don't have your normal, I go to work, I get a payslip type of deal.

Sub-prime = giving loans to people that probably shouldn't be given loans.
01:28pm 14/08/12 Permalink
Captain Lateral
Brisbane, Queensland
4570 posts
Did they never even go on the banks' websites and do the mortgage calculators to even get a sense of where they stand?


If you got fired and had trouble finding another job over $40k what is your plan b?

also, why can people who shouldn't be getting a mortgage able to get them yet I'm struggling so much? the houses i was looking at, the repayments are much less than rent is now, yet they want 10% deposit and if i got that money i'd still only be _just_ approved for $210k on my "higher than average"($60k+) income on the outskirts of f*****g kingston. I might be able to get around that if i go to one of those "rent to buy" places but then i'm forking over for a brand new $380k+ house just as far north / west, which would make it a struggle to afford fuel to get to work should my wife have trouble with money flow for a couple of weeks.

last edited by Captain Lateral at 13:50:49 14/Aug/12
01:43pm 14/08/12 Permalink
thermite
Brisbane, Queensland
10011 posts
I don't think that is the issue here.

I never provided payslips to get a mortgage or insurance. They always ask for it, but I just say my work doesn't do them. It makes it a little more tedious, but eventually they give up asking for it. Though I do everything through my bank, and they can see my account statements and all the people there know me from around.

last edited by thermite at 13:49:50 14/Aug/12
01:45pm 14/08/12 Permalink
defi
Wynnum, Queensland
2924 posts
if you got fired and had trouble finding another job over $40k what is your plan b?

Plan B: Find another job over 40k.
Plan C: Find 2 jobs under 40k that combine to be more than 40k.
Plan D: Find a job under 40k, move back to parents, rent house out, pay repayments.
Plan E: Plan D, but sell house while doing so.
Plan F: Prostitution.

Seriously though, these people always blame the banks. Sure the banks are in the wrong, but surely you can work out a simple budget to get your house repayments made, if not there are 30 new little budget companies to do it for you. Stop spending that $50 at the pokies every Thursday, $60 on ciggies a week, $40 on rum and put that $150 into improving your property a week and you may just win.

I feel like 90% of the time this s*** comes up, its lazy people that "cant find work". Work your ass off, make yourself an asset to the company, and you wont have a problem finding work / keeping work.
01:52pm 14/08/12 Permalink
Raven
Melbourne, Victoria
7281 posts
I could tell this was going on when I went through things with my broker. She was doing all kinds of things to increase the perceived LVR to the banks - even though mine, without being dodgy, is quite healthy.

It makes me sick seeing all these ads around new housing estates for companies advertising things like "Your own home with just $1,000 deposit" etc. So incredibly irresponsible.

If someone passed a law tomorrow that required an LVR of 50% on all mortgages, I would have no objections whatsoever - even though it would likely cause a >40% decline in my own properties value.
01:52pm 14/08/12 Permalink
sLaps_Forehead
Brisbane, Queensland
6066 posts
The government is equally resposible (both Lab & Lib).

They turn a blind eye to most of the rorting with regards to the Housing Bubble because they are scared that they will lose votes if Joe Speculator loses 30% on his inflated dogbox.

Just say the words 'Negative Gearing' to a politician and watch how fast they run away.
02:00pm 14/08/12 Permalink
thermite
Brisbane, Queensland
10012 posts
so two parties make a contract that you deem to be irresponsible, and the solution is to get the government involved and create legislation?

come on...
02:14pm 14/08/12 Permalink
Raven
Melbourne, Victoria
7282 posts
No, people sign these contracts either in an act of desperation, or dangerously misinformed of the implications, when the other party knows full-well the implications of the contract. The banks have very little to lose - when was the last time you heard of a mortgagee foreclosing on the bank? :)

A legally mandated LVR of 50% would drop house prices by almost 30% overnight.
02:17pm 14/08/12 Permalink
Captain Lateral
Brisbane, Queensland
4571 posts
I feel like 90% of the time this s*** comes up, its lazy people that "cant find work". Work your ass off, make yourself an asset to the company, and you wont have a problem finding work / keeping work.


because people don't exhaust all options before facing a massive default... ;)

Plan B: Find another job over 40k.
industrys f***ed for some reason, global financial crisis, massive amount of government workers dumped onto the private sector (IT anyone?) or whatever, but getting a similar paying job may take months to years.

Plan C: Find 2 jobs under 40k that combine to be more than 40k.
mm, the sleep, work, work cycle, why even have a house when just a bed would do? hopefully you don't have kids that require attention during their growing years.

Plan D: Find a job under 40k, move back to parents, rent house out, pay repayments.
i guess this could be an option if i didn't mind spending all my money and spare time traveling to and from work, too bad price of fuel, rego and assorted tolls is just going up and up and up making this a less viable alternative.

very circumstance specific.


Plan E: Plan D, but sell house while doing so.

Tried selling recently? apparently the market is s*** at the moment for sellers. you might get a fair price but it will take time.

Plan F: Prostitution.
with your face i'd try begging first. :P



last edited by Captain Lateral at 14:21:59 14/Aug/12
02:18pm 14/08/12 Permalink
FaceMan
Brisbane, Queensland
9194 posts
I was reading yesterday that some groups are calling for an end to Negative Gearing to make more houses available.
I think scrapping it altogether might be overkill but surely a sensible limit should be set.
Do ppl really need 5 - 6 investment properties ?

http://www.news.com.au/breaking-news/national/increased-demand-stresses-community-sector/story-e6frfku9-1226448783050
02:21pm 14/08/12 Permalink
demon
Brisbane, Queensland
6925 posts
so without watching a couple of very boring videos... can someone tell me if the chumps that got housing loans but now can't make the payments, will they lose the house? coz i really hope my unemployable douchebag of a neighbour loses his house.
02:26pm 14/08/12 Permalink
taggs
6038 posts
Don't worry, this isn't the same as last time, these are rated AAA, oh wait...


what's your problem with securitisation, and what exactly is the CBA RMBS issue you refer to not the same as?

I presume you have persuasive arguments for disparaging a mainstream financial risk managment tool that has been practised in Australia since the mid 80s.
02:30pm 14/08/12 Permalink
focal
Brisbane, Queensland
237 posts
The government is equally resposible (both Lab & Lib). They turn a blind eye to most of the rorting with regards to the Housing Bubble because they are scared that they will lose votes if Joe Speculator loses 30% on his inflated dogbox. Just say the words 'Negative Gearing' to a politician and watch how fast they run away.


The government would never let the housing market collapse. They will be giving out $200k first home buyer grants before the let it happen.
03:00pm 14/08/12 Permalink
shad
Brisbane, Queensland
3783 posts
Couldn't watch it all, got to the part where people on 25k a year were getting home loans and somehow thinking everything would be ok.
03:04pm 14/08/12 Permalink
Captain Lateral
Brisbane, Queensland
4572 posts
Couldn't watch it all, got to the part where people on 25k a year were getting home loans and somehow thinking everything would be ok.


WHO THE F*** ARE THESE PEOPLE TALKING TO GOD DAMNIT!

they either don't exist because its all fluff and no substance, or i'm speaking to the wrong people!
03:20pm 14/08/12 Permalink
DecayingCorpse
Brisbane, Queensland
2067 posts
got to the part where people on 25k a year were getting home loans

WHO THE F*** ARE THESE PEOPLE TALKING TO GOD DAMNIT!

both of them ^

i had to sell a kidney and my left nut to get a mortgage and have $20k for a deposit. even then we still had problems.
03:34pm 14/08/12 Permalink
defi
Wynnum, Queensland
2925 posts
Plan F: Prostitution. with your face i'd try begging first. :P
That is the only point I take offense to :P
All I mean by my points is that there is ways to get your self out of trouble. Even if it does mean taking a hit and owing more to the bank than you originally did before you brought the house you couldn't afford.
04:33pm 14/08/12 Permalink
natslovR
Sydney, New South Wales
7881 posts
The ratings aren't worth the paper they are not printed on

Many organisations invested in those risky mortgages because rating agencies rated them safe

The still haven't been held to account for this, well unless they've stopped fighting this first case and it was resolved without me hearing about it

http://www.abc.net.au/news/2011-10-04/councils-sue-standard-and-poors-rating-agency/3208720
06:25pm 14/08/12 Permalink
natslovR
Sydney, New South Wales
7881 posts
edit: double post
06:25pm 14/08/12 Permalink
BOOST
Brisbane, Queensland
506 posts
I presume you have persuasive arguments for disparaging a mainstream financial risk managment tool that has been practised in Australia since the mid 80s.


Was the GFC not persuasive enough for you?
09:10pm 14/08/12 Permalink
infi
Brisbane, Queensland
19042 posts
"everyone was doing it!"
09:17pm 14/08/12 Permalink
BOOST
Brisbane, Queensland
507 posts
so two parties make a contract that you deem to be irresponsible, and the solution is to get the government involved and create legislation? come on...


Did you watch the video Thermite? The fat ugly woman with f***ed eye-brows went to someone advertising themselves as a financial adviser of sorts who would help with money troubles. They turned out to be a mortgage broker peddling low doc's to get commission.

Sure its easy to say she's a dumbass. But the "financial advisor" she placed trust in committed fraud by dodging up her income. You don't fix a problem like this by saying "oh well, bad luck to the dumb f**** who couldn't do their finances" ... you have to stop greedy people taking advantage of people who are misinformed.


On another note, the bit about using projected capital return as income is pretty scary.
09:21pm 14/08/12 Permalink
skythra
Brisbane, Queensland
5957 posts
Captain Lateral

In this thread, captain lateral explains why palns B-F aren't plan A.

Thank you.
09:21pm 14/08/12 Permalink
trog
AGN Admin
Brisbane, Queensland
36430 posts
subject typo fixed; please be more careful
10:23pm 14/08/12 Permalink
natslovR
Sydney, New South Wales
8002 posts
Rating agencies have now been held to account for some of their dodgy practices.

Councils win fight against S&P over 'Rembrandt' notes

Standard & Poor’s had rated some POS financial instrument AAA and they (or ABN Amro, it's not clear to me) now have to cough up $30 million to repay some conservative investors who fell for the sham.

Hopefully this can be used as a precedent to make the rating agencies bleed enough that they think twice before doing it again.
01:34pm 05/11/12 Permalink
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01:34pm 05/11/12 Permalink
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