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Jessica Darnbrough
Confusion and misconceptions around low doc lending has led brokers to become unnecessarily cautious of writing these products, RESIMAC's chief operating officer Allan Savins has claimed.
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Mr Savins said brokers were initially scared off low doc lending due to having limited knowledge and confidence around NCCP when it was first introduced.
And, with the continued and rapid rate of legislative change, Mr Savins said it is difficult for some brokers to know where they stand with low doc lending.
“NCCP wasn’t created to provide a prejudicial or narrow based solution for all borrowers, it is fundamentally there to promote responsible lending,” he said.
According to Mr Savins, brokers’ misinterpretation of NCCP has not only impacted perceptions of both low doc products and who low doc borrowers are, but it is also having a detrimental effect on brokers’ ability to write more business.
“Many brokers believe NCCP has made servicing low doc borrowers impossible. Nowhere does the NCCP state that a specific interest rate makes a loan ‘unsuitable’ and this overall misconception has caused some brokers to needlessly stay away from servicing a legitimate segment of the market," he said.
"It's about making reasonable enquiries around a borrower's circumstances and declared income levels and keeping a record of that. Under the NCCP, the borrower self certification income declaration is no longer acceptable in isolation which is why other forms of alternative income documentation needs to be sought."
“As long as brokers take the time to make reasonable enquiries as to the borrowers’ needs and financial position and act with honesty and integrity, then there is no reason for brokers to be concerned about offering low doc styled loans to these borrowers."
A legitimate and underserviced segment of the market is the self-employed sector. In Australia there are more than two million that are self-employed, which represents a large and potentially lucrative market for brokers.
Recognising that self-employed borrowers are a niche segment, RESIMAC has a suite of alternative documentation loans specifically designed for long and short term self employed.
“RESIMAC has the view that not all borrowers are the same and if brokers comply with NCCP, keep detailed records, and act ethically, self-employed borrowers offer brokers the opportunity to grow their business, bottom line and often become long term and repeat clients," Mr Savins said.
RESIMAC’s Specialist Lending suite has three dedicated products that are suitable for long and short term self-employed as well as credit impaired borrowers and feature unlimited cash out to 80 per cent LVR, a rate discount for continued good loan conduct and a simple borrower credit classification.
