TWO of Australia’s major banks are investigating suspected fraud by home loan customers who rely on income from overseas. The suspect loans are believed to total less than $1 billion.
ANZ Banking Group and Westpac Banking Corp are looking into allegations that foreign income documents, like pay slips and bank statements, have been doctored to secure mortgage loans.
According to Fairfax Media, some buyers from China — which make up the bulk of foreign property investment — have been implicated in a scam allegedly perpetrated with the help of mortgage brokers. The suspect loans are believed to total less than $1 billion.
“We have identified issues with the income documentation of a small percentage of Australian resident borrowers who rely on foreign income,” an ANZ spokesman said in an emailed statement.
“Policy changes have been made to address this and we are also reviewing a number of brokers.”
The alleged fraud was contained to a “relatively small number” of borrowers and did not pose a credit risk, the statement 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 the portfolio average,” an ANZ spokesman said.
“All our analysis to date indicates the issue is relatively small and there is no material credit risk issue involved.”
Westpac spokesman David Lording told Fairfax Media the alleged scam had been uncovered by an internal investigation.
“When fraudulent activity is discovered we take action against those involved, including the broker, which normally results in termination,” Mr Lording said.
“Our delinquency rate on foreign income loans is lower than the portfolio average, and a large proportion of these loans are ahead on repayments.”
The investigation comes as the Turnbull Government gears up for an eight-week election campaign in which housing affordability is expected to play a central role.
ANZ, Westpac and Commonwealth Bank were forced to tighten mortgage lending to non-residents last month to allay regulatory concerns about lending standards and the impact of foreign investment on property prices.