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The Australian Sub-Prime

Discussion in 'Business, Investment and Economics' started by saiter, Aug 14, 2012.

  1. saiter

    saiter

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    http://www.abc.net.au/news/2012-08-13/mortgage-broker-blows-whistle-on-big-banks/4195920

    It seems as though the Australian banks have been engaging in the same practices as their US counterparts. They have supposedly been involved in issuing loans to applicants who have little to no income after co-operative mortgage brokers falsified the applicants details.

    I believe that this was presented (and is still being presented) to the Senate during the past week by Denise Brailey, a financial/RE consumer advocate. It is not only interesting to find out that our banks have been engaging in fraud, but also that our government is now holding ~$50 billion in RMBS - 10% of which could be fraudulent and/or worthless.
     
  2. numbercruncher

    numbercruncher Beware of Dropbears

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    And house prices would of only gone up half as much if it wasnt for these fraudsters ......

    Maybe some of them will get a prison sentence, not much different to robbing a bank is it?
     
  3. white_goodman

    white_goodman BOC

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    surely theres some self responsibility on the sub primees... is it the crack dealers fault the crack addict keeps comin back?
     
  4. sinner

    sinner

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  5. white_goodman

    white_goodman BOC

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  6. prawn_86

    prawn_86 Mod: Call me Dendrobranchiata

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    I do agree, but with no compulsary financial education required at any stage in life, if a banker tells you you can afford X, why should the average Joe question it? If the banker/broker then illegally changes the forms to inflate income without your knowledge surely that is illegal...?
     
  7. white_goodman

    white_goodman BOC

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    im not excusing the brokers for illegal practice, what im saying is we cant have a society where we excuse the bad behaviour just due to the fact they cant use a calculator
     
  8. young-gun

    young-gun

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    Banks were/will be wreckless, and people were/are stupid.
     
  9. saiter

    saiter

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    I think the point was that the applicants had no idea that their applications were made fraudulent after they had signed the contract.

    I think the bigger issue here is: What would happen if all of these debtors could no longer make the repayments and were to file for bankruptcy?

    AFAIK, Australian mortgagees do not have their mortgage debts forgiven (unlike in America) so this would mean that the banks would still make some sort of return. The problem that I see is that they won't be making any return until the mortgagees have a satisfactory level of income; and since many of them are seniors, pensioners or close to retirement, their only source of income would be their pension allowance or superannuation funds. Either these funds will be used to repay the banks (and we will have a heap of homeless/poor seniors) or the banks will never get all of the money that they expected to receive. If the latter were to play out, then we may see the banks play the "too big to fail" card and government may head in the same direction as the US.
     
  10. white_goodman

    white_goodman BOC

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    doesnt matter if they knew it was fraudulent, if the mortgage repayment per week is $1000 and they only earn $900 a week, they should know they might be biting off more then they can chew.Likewise ud imagine the banks would have a suitable claim against fraudulent mortgage brokers (under the assumption the banks didnt know - which i doubt) Also most states in the US ARE recourse loans despite the myth that is sold across the interwebz

    http://www.forecloseddreams.com/recourse_states

    note Florida and Nevada are RECOURSE states

    The myth that its always the banks or the brokers that are the only greedy ones gains too much traction imo..
     
  11. Glen48

    Glen48 Money can't buy Poverty

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    White-Goodman,
    You are correct saying most should be able to work 900 is to short however a lot some how assumed the FHOB would some how end up in their pockets as cold cash and they could use that most don't know any thing about buying a house and just sign where they are told to do.
    They do know a house will double every 7 yrs so all they have to do is hold on for a few years and wait.

    And many are about to find out the above is not true, I am lead to believe bankruptcy only lasts for 5 yrs by then house prices will still be dropping so the home owner now can start again once the bottom is reached.
     
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