Calls for Royal Commission on low doc loans
The Australian Democrats have called for a Royal Commission into the Australian mortgage finance industry following evidence given to a Parliamentary committee and media coverage on the alleged mis-use of so-called "low doc" loans.
Australian Democrats housing spokesman David Collyer claimed a Royal Commission was necessary because of the evidence delivered to the Senate Economics committee of widespread, systemic financial fraud.
"There is a great deal at stake in this matter, not least the solvency and prudent management of Australia's big four banks," he claimed.
The Senate committee was told that where low doc loans were concerned, borrower incomes and assets were regularly and systematically inflated to make loans appear appropriate and repayable when they were not.
Collyer said such fraudulent low doc loans were the Australian equivalent of the so-called "liar loans" in the US.
He pointed out that the Federal Government had acquired $14 billion worth of Residential Mortgage Backed Securities since the global financial crisis and analysis suggested that 10 per cent of these might be low doc loans.
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