Self-employed, unemployed, seasonal workers, and new immigrants generally struggle to meet strict requirements to qualify for loans.
A loan with few to no documentation or credit history requirements is easier to qualify for, but generally carries a significantly higher interest rate.
[3] Residential low doc loans are designed for self-employed borrowers who cannot provide tax returns as evidence of their income.
The loan must be National Consumer Credit Protection Act unregulated as they do not meet the NCCP requirement to reasonably verify the borrowers situation.
[8] Elderly people were often targeted by banks such as Westpac and convinced to take out large loans on Ponzi scheme-type property and other investments, often promising high returns as a financial “nest egg”.
Many investors lost their savings and/ or homes in through these schemes and some financial institutions have subsequently refused to give borrowers copies of their loan applications.
[9] Documents were produced at the inquiry which showed bank business development managers promoting methods for mortgage brokers to subvert the lenders requirements.
However she insists she was encouraged by banks to carry out this deception using financial tricks like claiming capital growth such as rising house prices as income.
As William Black, a former banking regulator, testified before the FCIC, the mortgage industry’s own fraud specialists described stated income loans as “an open ‘invitation to fraud’ that justified the industry term ‘liar’s loans.’”[13] Angelo Mozilo's Countrywide Financial designed a "Fast-N-Easy loan for mortgage lender Fannie Mae.