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Tuesday, 19-Nov-2013 05:04 Email | Share | Bookmark
Low-doc Loans A Risky Business












Macquarie Research analyst William Ammentorp said that while the risks involved in low-doc lending were higher, they were manageable. He cited research by Bluestone Mortgages, which shows that a high number of self-employed borrowers live in the wealthier suburbs of Sydney and Melbourne, including Vaucluse, Manly and Brighton. The major banks also control the risk by requiring borrowers to take out lenders' mortgage insurance or put in a certain amount of equity. For example, NAB requires 40 per cent equity in a low-doc loan and has capped home loans at $1.5 million and business loans at $750,000. Macquarie Research estimates that NAB's recent entry into the low-doc market could deliver it additional profits of $37.5 million a year by 2007. Sherman Ma, who has been in the low-doc/non-conforming lending game low doc loans Australia wide for more than eight years, said the types of loans the banks were writing were more accurately described as "asset lending". In fact, he thinks that over time, that's what the loans will come to be called. <br>For the original version including any supplementary images or video, visit http://www.theage.com.au/news/Banking/Lowdoc-loans-a-risky-business/2005/03/25/1111692625246.html





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





Up to 30 per cent of Adelaide Bank's home loans are low-doc; Suncorp's is more than 10 per cent; while St George Bank's is less than 5 per cent. The majors are all at or less than 1 per cent. Macquarie Research estimates that NAB's entry into the low-doc market could deliver it additional profits of $37.5 million a year by 2007. The banks' push into the market is a marked turnaround from five years ago, when low-doc loans were dismissed as too risky. This allowed specialist lenders Liberty Financial and Bluestone Mortgages to build up dominant positions in a fast-growing and profitable market. Both these businesses are now considering a stockmarket listing or trade sale, following their success. <br>For the original version including any supplementary images or video, visit http://www.theage.com.au/news/Business/Lowdoc-loan-market-too-juicy-for-the-big-banks/2005/04/01/1112302233136.html





Low-doc loan market too juicy for the big banks





"You're going to have to thumb through the Yellow Pages until you hit the magic lender that still offers a low doc loan," cautions Peter G. Miller, author of "The Common-Sense Mortgage," a book on mortgage financing. The softening economy and problems with low doc loans made in the past are among the reasons many lenders are backing away from this type of home loan, designed to make it quick and easy to obtain a mortgage if you have at least a 20 percent to 30 percent down payment on the property you're financing. "When the economy started heading south, some of these loans starting turning risky," says Keith Gumbinger of HSH Associates, a mortgage publishing firm based in Butler, N.J. If you're in business for yourself and have ever applied for a mortgage loan, you'll know why the low doc loan -- introduced in the late 1980s -- became such a hit with the self-employed. That's because the standard mortgage documentation process imposes such extensive paperwork demands on the self-employed and those who work on a contractual basis or for commissions. "It's a real hassle for the self-employed to get a mortgage," Mr. Miller points out. Suppose you're a young attorney in practice for yourself. You happen upon a little stone cottage on a hillside and decide to take out a standard mortgage to buy the place. <br>For the original version including any supplementary images or video, visit http://articles.baltimoresun.com/1991-01-13/business/1991013148_1_doc-loan-mortgage-documentation-low-doc



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