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Mortgage fraud involving foreign investors is limited to a small section of the industry, and is not systemic and entrenched, according to the FBAA.
The industry body’s spokesperson, Peter White, said he is aware of fraudulent practices in the third-party channel, but is adamant that fraudulent loan applications are not widespread.
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“Ninety-nine per cent of brokers are doing the right thing, but unfortunately, like in any industry, there is a tiny element who cross the line, particularly when it comes to the repayment of loans that rely on foreign income from certain countries,” he said.
Mr White said the National Consumer Credit Protection Act and ASIC have done a good job in exposing dishonest practices among brokers and has called on the industry as a whole to report any dubious and suspicious acts carried out by loan writers.
“We must unite and not let a very small number of deceitful brokers get away with smearing the honest work done by the others,” he said.
“It is time to kick them out of our industry.”
Mr White’s comments come after Mortgage House CEO Ken Sayer told The Adviser he does not understand why “everyone is denying that they know about [mortgage fraud associated with foreign borrowers]”.
“Every mortgage insurer, every bank BDM, every broker, every relationship manager and every bank has known about this for 20 years,” he said.
“We were approached by some Chinese brokers for Chinese investors two years ago, but because we’re so anal, we actually wanted to contact the third parties in China to confirm that the borrowers were actually self-employed. The brokers withdrew the deals from our desk and we haven’t seen them since.”
