The Phaserl


US-Style Mortgage Fraud a ‘Nuclear Bomb’ to Australian Banks

from Wolf Street:

The Australian Securities & Investments Commission (ASIC), which regulates financial services companies,has the backbone of a chicken wing when it comes to enforcing the rule of law; this is widely recognized in Australia and resulted in a Parliamentary inquiry. If any politician believes that ASIC is a “tough cop on the beat,” they should seriously reconsider their opinion on this issue.

Under the pomp and ceremony of the government’s decision to levy the banks to fund ASIC’s prolonged $400 million+ annual fishing vacation is its pursuit of catching tadpoles in the open seas while leaving sharks and barracudas to freely roam. Unfortunately for the regulator, there is a new term Australians will become accustomed to.

Control fraud. It refers to fraud committed by the high-ranking employees of a corporation: executives and managers, typically a bank.

It’s a crime that ASIC has decided neither to investigate nor prosecute, leaving borrowers on their own with no pennies to spare and nowhere to turn to.

So here’s how a control fraud would work. Let’s say you’re an asset-rich and income-poor (ARIP) husband-and-wife in their 70s surviving off an income of less than $23,000 a year and own your $400,000 (today’s value) home outright. You want to obtain a $400,000 loan from the bank for an investment property that will run at an annual net loss. You walk into the bank branch for an appointment and are presented with 3-page pre-filled loan application form (LAF) stating only the basics details.

During the application process, you honestly state your income and assets. You are then issued with a 30-year interest-only loan you have absolutely no chance of servicing beyond a three to five year horizon. In other words, there is a strong chance that a few years later, the only way you can get out of your loan is to sell your investment property at a higher net price than what you paid for it to extinguish your mortgage — or go bankrupt.

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1 comment to US-Style Mortgage Fraud a ‘Nuclear Bomb’ to Australian Banks

  • Sergio of the Jungle

    It’s obvious to the casual observer that the Mandate given to Government Regulators to pursue fraud, has been captured by powerful, moneyed interests,; namely those perpetrating the crime. As evidenced on an international level (eg, CHTC’s silver investigation finding lack of banker manipulation when given conclusive evidence and the means to observe the crime in action as well as their lack of interest and denial that they were aware of the legal proceedings against Deutch Bank and admitting of their fraud in a court of law it couldn’t be more corrupt than this as well as the Australian regulator in denying their observations. They are beyond care, they are colluding with the banks in their drive to bankrupt us all.

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