Yossarian wrote:
(a) What % of US borrowers handed back their keys prior to defaulting? Source? (b) Same incentive exists in Oz. Borrowers in strife and with negative equity rarely have other assets to speak of (or have protected them from bankruptcy proceedings) and for most people, bankruptcy in Oz has arguably fewer long term consequences th…[Read more]

Hi Yoss,

I think it’s getting a bit off the topic re who was in the crowd / who was on the field – the post relates to an article on risk grading by the banks. My point being that the banks have already adopded changes in response to Basel (amongst other things). NAB specifically changed equity risk grades from A to D to A to J. Client risk…[Read more]

Yossarian wrote:

Banker wrote:

blackhotel wrote:
Imagine a bank like that!

Sounds nice in theory. The biggest cause (in my opinion) to the financial crisis in the US was and still is non-recourse lending. Most loans are and were non-recourse which means if the bank sells the property for 300k and you owe them 400k – you are not liable for…[Read more]

That is ‘comparison’ as opposed to ‘compassion’. Not sure if bank and compassion should be in the same sentence.

Yossarian wrote:
Hmmm."Banker" , the Basel (not BASIL or BASAL) accords (I and II) are the recommendations on the Basel Committe on Banking Supervision. Central banks and regulatory  bodies are represented, not "actual" banks.

I thought I did pretty well with spelling given it was all on the phone… Basil, Basal or Basel – you obviously know w…[Read more]

Slallen – can you tell us which two lenders you used?

I approved a deal within 12 minutes recently – major bank.

This is nothing new however it is common in commercial rather than retail markets. In australia banks often lend (for commercial) with base rate plus margin. E.g. Bank bill rate plus 3.0%.

For commercial lending banks have two key risk grading systems – one for lending margin and the other for risk grade

e.g.

Rating 1 to 24 for client risk…[Read more]

blackhotel wrote:
Imagine a bank like that!

Sounds nice in theory. The biggest cause (in my opinion) to the financial crisis in the US was and still is non-recourse lending.

Most loans are and were non-recourse which means if the bank sells the property for 300k and you owe them 400k – you are not liable for the 100k difference. Therefore…[Read more]

ryan mclean wrote:
What are the lending criteria for no doc loans? Why would the banks lend no doc and how can they see if you fit their criteria?

The major banks don’t do no doc – you will need a smaller non-banker lender. Low LVRs and high rates. Hence a lot of people take the common fraud opition with low doc. Richard has a point of the…[Read more]

Terry is spot on. Go caveat go…

even if the purchaser has put one on, the wife can put one on too as she will have a clear interest in the property.

How long has the husband owned the property and how long have they been married? hope the poor bugger didn’t already own th asset and got left with his pants down…

I went to a training session with the head of one of the major banks fraud teams recently.

Their biggest two areas of fraud is;

1. false income information
2. Non disclosure of liabilities

The biggest problem with bank low doc loans is that if you actually read the low doc declaration they do not state ‘what you think you might earn’ or ‘what…[Read more]

Hi Matt,

Thanks for the post.

It seems that almost everyone has this idea in their head that banks cross collateralise all properties, all the time, without thought as to be benefit / downside of the structure. It simply couldn’t be further from the truth. Most relationship bankers I know prefer not to cross properties for simple transations as…[Read more]

I understand your predicament.

Re additional 50k. The dollar amount is not so much the point – point being that aggressive invesment stratergies are always capped by equity or servicabilty or both – therefore how do you make more money and make it faster to feed your property investment ambitions???

How do you make an extra 50k, 100k or , 150k…[Read more]

So have you explored other ways to make cash? E.g. a way to make an extra 50k per annum to help raise deposits and provide servicing for banks?

To grow a really big portfolio you also need a good cashflow generator… If you could sort this you could buy as many properties as your heart desires!

trust4sal wrote:
I;ll not be borrowing money from any lendor for that.

Hi Terry. Agree with your post however no point in tipping is cash to buy in trust and having no asset protection for the original purchase price plus costs e.g. Only protecting growth.

Every time I use to annual review a file in the bank I would point out beneficiaries…[Read more]

Call me naive but dont accountants, financial planners, lawyers, developers, real estate agents and mortgage brokers all do the same thing?

They all have their own agendas and they all know other people in related areas they will refer to…

Terryw wrote:
Company shares are also considered property – so if you are sued they could fall into the hands of creditors.

You stated you will not be borrowing. If you contribute cash to buy the property, it will be on the balance sheet as a loan from you to the trust. Therefore an asset to you – e.g. Similar to shareholdings. Be careful not…[Read more]

You don’t even need him on title to borrow. You could have had him as guarantor or even co-borrower.

Sorry but 10% to get you to 100% will be a stretch. If you look online for second mortgages You are closer to 18% but you still need some equity. Caveat loans can cost up to 5% per month.

You need to work out a way to get some cash / assets first.

Depends on the lender. CBA retail are 1 to 5. If you are a 1, your own estimate of property value is acceptable as a valuation and deals are automatically approved on 95% of cases.

NAB business bank have grades 1 to 23 ( again 1 is best).

All lenders are different.