Two major banks have responded to recent reports of suspected fraud by mortgage customers who rely on income from overseas.
A Westpac spokesperson told Mortgage Business late on Monday that the bank has identified an issue with some loans that rely on foreign income, which it is currently investigating.
“We take any allegation of fraud very seriously. Any potential fraud is thoroughly investigated,” the spokesperson said.
“This will involve contacting customers to seek further information and to verify the information they have provided in their application. We also liaise with the appropriate regulator and the police as required.”
Westpac said its delinquency rate on foreign income loans is lower than the portfolio average, and a large proportion of these loans are ahead on repayments.
“Overseas borrowers are also well secured. It is important to note that LVRs on these loans are 70 per cent,” the bank said.
ANZ confirmed this week that it is reviewing a number of brokers after identifying similar issues with income documentation for home loans.
In a statement provided to Mortgage Business, ANZ said it has identified issues with the income documentation of a small percentage of Australian resident borrowers who rely on foreign income.
“Policy changes have been made to address this and we are also reviewing a number of brokers,” an ANZ spokesperson said.
“Of the relatively small number of existing borrowers where we believe there are issues with income documentation, these are generally genuine owner-occupiers who have LVRs less than 80 per cent and the loans are performing better than the portfolio average.
“All our analysis to date indicates the issue is relatively small and there is no material credit risk issue involved.”
ANZ was the first of the big four to curb mortgage lending to non-residents, announcing late in March that it would no longer accept applications for loans based on 100 per cent foreign income.
Westpac, St George, the Bank of Melbourne and BankSA no longer accept mortgage applications from non-residents. The banks will also no longer accept any foreign self-employed income applications or applications from temporary visa holders living overseas.
In addition, LVRs for acceptable domestic applications with foreign income will be reduced from 80 per cent to 70 per cent.
According to an article by Christopher Joye that appeared in The Australian Financial Review this week, ANZ and Westpac have discovered that they have each approved “hundreds” of mortgages backed by fraudulent income documents, “which were allegedly manufactured with the help of dodgy mortgage brokers”.
[Analysis: Chinese money and Australian real estate]