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NAB highlights ‘phantom investors’ issue

The major bank has revealed that the bank has been unable to contact hundreds of borrowers on COVID-19 deferrals, noting that the majority of these people are investors.

Last week, the chief executive officer of NAB, Ross McEwan, told the standing committee on economics that while the vast majority of mortgagors on repayment deferrals had resumed paying their mortgage, there were a small contingent of “phantom investors” whom the bank had not been able to contact.

Mr McEwan revealed that approximately 95 per cent of the 130,000 NAB customers that had been on COVID-19 repayment deferrals had resumed making repayments on their loan since the support mechanism ended in late March.

According to NAB, the total amount of outstanding on deferral came to approximately $58 billion at the height of the program, but this has since dropped to around $1 billion.

Mr McEwan commented: “It has been a very good recovery for these customers, but there has been a small cohort that are not able to pay full, and therefore we’re assisting them with partial payment or working with them [by] moving to interest-only, or to actually complete deferral or taking a different path.”

However, he revealed that approximately 23 per cent of customers who were receiving additional support through NAB Assist are “uncontactable”.

“[W]hat’s interesting about the deferrals is that there’s a portion of their customers that are not responding to contact,” the NAB CEO said.

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“So, there’s 23 per cent of our customers that went into NAB Assist that we’re having difficulty getting some form of response ... Interestingly, 67 per cent of those are investors,” he said.

Indeed, the NAB CEO told the committee that these customers had been regularly servicing their payments pre-COVID but had not restarted payments since the deferral period expired.

He explained: “Pre-COVID they were making payment. They went into deferral, and have come out of deferral, and they are not making payment. They are non-contactable. The majority of those are investor lending for homes ... which is an interesting position.”

According to the chief risk officer, Shaun Dooley, the total number of these “phantom investors” would be “less than 1,000”.

As for those contactable customers that still require aid through the NAB Assist team, Mr McEwan assured that the bank is helping them through their trials.  

“We’re not at the stage of getting any ready for a sale, unless they themselves are requesting to do so. We’re not at that stage with them, we’ve been working with them. I think we’re still months away from having to face that reality. A lot of it is job-related,” Mr McEwan shared. 

The CRO added that the bank would monitor the “roll through of 30-days past due into 60-days past due to 90-days past due”.

Mr Dooley continued: “We’re still at the 30-day past due rate peak and that started to come down ... We’ve seen some of those customers continue to struggle to make repayments.

“It’s still months off I think, as we work through them. [W]e want to obviously try and help our customers stay in their properties as much as we possibly can, and that takes time. It takes a lot of conversation and work with our customers.”

[Related: Loan deferrals plummet by over $20bn]

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