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Saturday, 30-Nov-2013 15:07 Email | Share | Bookmark
Missing Pieces In A Low-doc Lending Trail That Shattered Lives

Search by borrower can still turn up a 'low doc' mortgage

It is the might of the corporate establishment and the government versus the 70-year old pensioner from outback WA. But this lone ranger is onto something. For one, the banks and regulators are not handing over information to borrowers about their own loans: principally, the LAFs. Banking Ombudsman Philip Field conceded that, in some cases, the Financial Ombudsman Service had not used its powers to demand the lenders release the LAFs. "There are some cases where we haven't compelled the discovery of the LAFs and some cases where we have. The LAF is just one piece of the puzzle," says Field. Plaintiff lawyers who have acted on the few cases which have made it to the courts (fighting the banks is an expensive business) contend the LAF is a vital part of the contract and should be available to borrowers. <br>For the original version including any supplementary images or video, visit

Paperwork demands vary from lender to lender when it comes to mortgage documentation. But while an attorney on salary with a large corporation can usually prove his income primarily with W-2s, his counterpart in private practice, who has no such documents at hand, may have to go to amazing lengths to demonstrate his borrowing capacity. On a standard low doc loan application, you can assume the lawyer trying to buy the stone house will have to come up with most of the following: two to three years' worth of tax returns, a business credit report, year-to-date profit and loss statements and a current balance sheet. "It can cost you thousands of dollars to prepare that kind of documentation," says Mr. Miller, whose 1991 edition of "The Common-Sense Mortgage" deals at length with the issue of mortgage documentation. The assumption behind the low doc loan was that someone with a big down payment was a good enough financial bet for the lender that he could be spared the kind of rigorous documentation usually required. On a more or less good faith basis, he would be allowed to take a mortgage with a minimum of proof that his income and assets were what he claimed. <br>For the original version including any supplementary images or video, visit

Courts rule against lenders as boom-time low-doc loan frenzy unravels

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