Westpac, ANZ In Australia Investigating Suspected Foreign Home Loan Fraud
May 10, 2016 | Fraud
Two of Australia's biggest banks on Monday said they are investigating suspected fraud involving false declarations by a number of home loan borrowers who rely on foreign income.
ANZ Banking Group and Westpac Banking Corp said the alleged fraud was discovered during internal investigations and posed no credit risk.
The announcement follows moves by ANZ, Westpac and Commonwealth Bank last month to clamp down on mortgage lending to non-residents, following regulatory concerns about lax lending standards and soaring house prices driven partly by foreign investment.
The alleged fraud is another headache for Australia's major banks as they battle slowing earnings growth, and could fuel calls for political action to improve housing affordability with a federal election looming on July 2.
"When fraudulent activity is discovered we take action against those involved, including the broker, which normally results in termination," Westpac spokesman David 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."
CHINESE DOCUMENTS
ANZ and Westpac discovered they had each approved hundreds of home loans backed by fraudulent Chinese income documents, allegedly manufactured with the help of mortgage brokers, The Australian Financial Review reported.
The banks did not say whether the suspected fraud was linked to Chinese clients, some of the biggest buyers of Australian property.
China has become the largest source of foreign investment in Australia, overtaking the United States, according to official figures.
"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 email.
"Policy changes have been made to address this and we are also reviewing a number of brokers."
The Australian Financial Review noted that the total value of ANZ and Westpac loans afflicted by allegedly fraudulent income information is likely to be less than A$1 billion, or 0.12 per cent of their combined A$837 billion of residential mortgages.
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- Article originally on stuff.co.nz.
