Home Loan Liars

Just after we went into lockdown, an attractive woman walked into my office wearing heels and a very high cut, black, mini skirt.

“Hi, are you Adam?” She said, battering her fake eye lashes.

“I am. And you are…?”

And before she could utter another word, my intuition was screaming its lungs out. “PLAYER!”

Story goes like this…

She was applying for a $700,000 home loan and wanted me to sign some documents to verify her financials.

I asked how she got my name and all she could say was, “I don’t remember”.

(Tip – whenever someone says, “I don’t remember”, you can bet there’s a 99.9% chance they’re lying. It’s dead easy to prove, too.)

As it turns out, my intuition was bang on the mark.

She was self-employed and declared an income of $85,000 on her tax return but said she was earning $300,000 on her loan document.

(Tip two – always be suspicious of round numbers).

(Tip three – what fool would disclose that kind of information to someone they don’t even know? A desperate one!)

Her dodgy mortgage broker told her that if she could get someone to verify her docs, he could get the loan through.

Was I shocked? Nup. It’s happens allllll the time.

Here’s proof. In a recent survey by the UBS investment bank, it was found that almost 50% of borrowers lie on their loan applications.

That means, if two homeowners with a mortgage were sitting down for coffee, there’s a good chance one of them lied to get their loan approved.

Consequently, this week the Australian Prudential Regulation Authority (APRA), made it mandatory for banks to stress test all loans as if interest rates went up by 3%.

Nothing new there. We’ve been stress testing client scenarios assuming an interest rate of 5% for nearly five years.

But here’s the most important question…if the banks stress test home loans, will it get rid of the liars?

No. In fact, it could easily encourage more lying to get loans across the line.

Which reminds me…

Four years ago, I got absolutely hammered by website visitors when I posted a Moowsletter suggesting the Royal Commission into the banks was a joke.

There is no denying some of the behaviour by the banks was, and still is, unconscionable.

But it takes two to tango. Meaning, the unbridled greed and deceit by some customers is no better. The UBS survey is proof positive.

And this is where the girl with the fake documents didn’t realise what a dumb, naïve game she was playing.

If her mortgage broker was ever reported to ASIC (most likely by an aggrieved client), they would go through his loan book with a fine-tooth comb and audit every one of his clients to find out who else has lied.

Put simply, she could very easily be brought down by another client, just as unscrupulous as her.

The same thing applies to dodgy accountants.

People are always telling me they just want an adviser, broker, or an accountant they can trust.

Well guess what, we want the same thing, clients we can have an honest relationship with.

Without the fake bits.

Have a great weekend!

Adam

Back paddock – nothing good ever comes out of your comfort zone.