Forum Replies Created
What we know to a certainty is that someone estimated the market value in January to be $375K and that the actual market value was established by you 7 months later at $280K.
Why do you think, given the above, the January valuation has any relevance at all?
Oddly enough, credit scoring is entirely rational, which is why it works.
Certain variables, alone or in concert with others, prove to be reliable predictors of a loan defaulting. They change and are changed over time but the bottom line is they are better at predicting default than people are.
Telephone numbers are a case in point. Historically, people who didn't have land line telephones werepoorer consumer finance risks than those that did. If you think about it for a minute you can see why that might be the case.
Today, the lack of a landline has less predictive validity because there are an increasing number of people relying entirely on their mobile. Less value but not no value.
Credit scorecards are used because they are good at scoring credit..
.
FWIW.
Paid $280K.
Minor reno.
Values up at $320K
Doesn't seem unreasonable to me.
It's always worth noting that the value you NEED has no bearing on the value IT IS.
Just sayin'
Short version: I’ve been trying – with limited success – to game the system around valuations and thought a barely coherent rant would make me feel better.
John Maxwell wrote:I’m not going to argue with you Yosarian… You might want to look into it further, I was a Mortgage Broker for 11 years, mostly dealing with Non- Bank Lenders but my first paragraph is correct.In my second and third paragraphs U am referring to Option agreements. The Option agreement allows us to nominate the buyer and the price. The valuation is the price nominated. There is definitely nothing hidden or any misrepresentation. What we do is something Developers and Property Agents have done for many many years.
Waydo, we are not purchasing the property… The client is. We secure the deal under Option and release the equity to the client under a Capital Option. Win win win all round – the developer gets to sell 10 – 20 properties and save their ass from bankruptcy court, the client receives 20% equity upfront (or more) and we receive a modist fee for our services.
I run a lending business so arguing with me on this one would indeed be pointless. You are wrong.
Does the copy of the contract for sale provided to the lender and the valuer reflect the net price being paid by the purchaser? This should be a simple yes/no answer but I suspect you may struggle…….
Your first paragraph is wrong.
Your second and third paragraphs appear to suggest the amount represented in the contract for sale is not the genuine amount of the sale. Can you explain how this is not an obvious attempt to misrepresent the transaction to the lender.
Boshy888 wrote:Has anyone else heard about the changes to the law relating to land ownership that now makes all land in QLD the property of the government – over and above private ownership?To change this law they first had to move the Governor General's position 'sideways' so he/she now works for the government and pretty much rubber stamps whatever their told to do. Where before the Governor General's responsibility was to check that nothing in the document conflicted with our constitution prior to rubber stamping it in order to protect citizen's rights.
They are also working on doing the same thing with the law in every state of Australia. Apparently doing this is reputed to be unlawful as it should have gone to a referendum.
I heard about this by watching a taped meeting that was held at Inverell and attended by people who were very concerned about the long term issues that could arise from this legislation. E.g. if the Government borrows heavily and cannot repay their debt, their assets can be siezed by the lender country. Government assets that now include our land, goods and chattels. This is just one example. There was also mention of the Agenda 21 document which is working towards the same thing worldwide.
The meeting can be viewed at http://www.youtube.com/watch?v=OF9O-WOEIy8&feature=relmfu and there are about 4 separate videos that cover the whole meeting. The first five minutes or so have a man talking that is boring. A woman then comes on who talks for the remaining time and the video becomes increasingly interesting in part 2 to part 4. She appears to have done quite a bit of research on this topic.
For those in this forum who are more knowledgeable about property and law what your take is on this?
Thanks
It’s a conspiracy theory postulated and perpetuated by nutjobs.
Apparently.
Michael,
You are endeavouring to pass yourself off as an expert in a field you clearly have limited knowledge of.
Exit fees are what the legislation say they are. No more. No less.
I hope you are not taking money from people in return for your “services” as they will clearly lose their money.
Worth remembering:
It isn’t retrospective and only applies to new loans from 1 July.
It doesn’t apply to economic loss associated with breaking a fixed rateAIF QLD wrote:Couple more for you guys.These guys are predominately associated with commercial finance front however i'm sure they would do smaller loans as well.
Recently we have had the delight of dealing with a company called Finance Solutions Australia (FSA) through a recommendation. Scott Wyllie is the main front for this organisation whom i am confident he has been bankrupt before and is running the business under his wifes name Amanda Wyllie to get around the legalities (I have the company extract to confirm).
We were advised by Scott that he and his team (listed below) are able to source funds overseas for development projects at competitive interest rates. After he convinced 5 of my clients including myself and quite a number of other clients from the referring parties, fees were paid an offer received for our loans. *n.b. These funds were 100% refundable which to this day we are still waiting for approximately 45k which has been outstanding since November 2010.After this we handed over all of our information to Scott whom was dealing with an Anand Sharma or Sharmar T/A Real Estate Finance & putting his name to Golden Link Investment Corp Holdings Pty Ltd whom have a registered office in Summer Hill NSW & are operating from Kuala Lumpur Malaysia is when our eyes opened.
It took 3 months to get us full approvals of which the indicative interest rates went from 8% – 9.75% to a whopping 22%pa plus a large fee to be paid into an overseas banking account.
I warn anyone out there if you are have had or are having dealings or thinking about using them at all please be advised to be EXTREMELY CAREFUL on all levels. <moderator: delete personal comment>
Another way of looking at would be that you need to up your due diligence before recommending a lender.
Just a suggestion…..
Banker wrote:OK Yoss, so it is positive reporting however as I've said this has been happening in commercial for a long time.
On Dunn and Brad Street you can get all sorts of info on a client including but not limited to: annual turnover, number of staff, term with existing bank, major suppliers / customers etc.
Is this not positive reporting?
Are you telling me these things don’t affect commercial risk grading, underwriting and pricing on commercial deals???I don’t see the point in posting back and forwards re the technicalities – all these things are already in the commercial market. In the commercial sector you don’t need Veda – you need Dunn and Brad Street along with detailed aged creditors / aged debtors etc. Banks monitor ratios that show if debtor / creditors days have increased or decreased – this indicates if they pay bills on time or not.
Questions is whether this type of assessment is coming to the retail sector…
No, positive credit reporting does not exist in the commercial sector because it does not exist in Australia. What you are seeing in the D&B reports is the aggregation of publicly available data plus the output of our exisitng negative reporting system. This is why D&B themselves were one of the most vocal lobbyists for the introduction of positive credit reporting in Australia (we are one of only 4 countries in the developed world who operate exclusively under negative credit reporting).
As I said in my previous post, positive credit reporting is contingent upon changes to the Privacy Act, thereby allowing credit reporting agencies to obtain information currently not permitted to be disclosed on credit reports. It is happening and will have an impact of the ability of certain borrowers to obtain credit as the lender will have greater transparency to the borrower's actual position and payment history. Whether this ultimately extends to risk-based pricing for prime resi mortgages will be a question of the effort vs. return for the lender.
If you like to learn more, why not check out Dunn and Bradstreet:
http://dnb.com.au/Header/News/Learning_Centre/Credit_Risk/Campaign_for_consumer_credit_report_reform/index.aspxBanker wrote: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 grades were revamped at the same time. NAB had a huge internal focus to adopt these new policies. They even called the internal training Basel – e.g. All business bankers had to complete new Basel training modules to learn how it affected their approval authority etc. What part of this has or has not been implemented as law is irrelivant as the banks risk policies are not purly legislation based. In many cases bank policy shifts in anticipation of pending rules / legislation. Maybe with Basel they jumped the gun however they have adopted many risk grading measures as a result. I'm not too sure where you are coming from re who was in which meetings – unless you disagree with my post re banks having already implemented new risk grading as a result of Basel ??? I think the real purpose of the topic is risk grading and whether or not it will slip into the retail banking sector in terms of pricing etc and if so how this will effect investors. It is also worth noting that non comforming lenders for a long time have adopted risk grades with higher rates based on client credit history and LVR. The non conforming lenders cetainly haven't adopted these rules because of Basel so I certainly am not suggesting it is the only grounds for risk grading. Forgive my spelling – back on the iPhone…Actually, the topic and article relate to positive credit reporting which is unrelated to the capital rules (old or new).
Positive credit reporting allows Australian credit reporting businesses to collect and provide additional information to credit providers. As you know, currently in Australia we only have negative credit repotting in that credit reports show basic info around credit applications plus any defaults registered. Once the required Privacy Act changes are implemented, the existing negative data will be supplemented by positive data such as outstanding loan balances, payment history and the like.
This will give credit providers (all, not just banks) a better picture of the outstanding debts of a potential borrower, along with further details as to how and when they pay. Of course, this is good for the honest, reliable borrower and bad for the borrower who "forgets" the odd credit card or, though not subject to a formal default, is showing erratic payment behaviour.
Capital requirements are a different thing altogether and apply to APRA-regulated lenders.
NAB are using the "advanced internal ratings" regime under Basel, allowing them – subject to a range of criteria and processes too boring to go into here – to "self assess' and apply capital based on actual risk rather than the blanket "category" approach. Essentially, it provides a capital "reward" for banks that can show a more sophisticated approach to risk, which is more than simply further adding additional segments to commerical risk rating matrices. Giving the relatively homogenuous nature of residentially backed lending, it is unlikely to impact directly on pricing of those loans. Positive credit reporting and developing improvements in credit scoring engines, may well, on the other hand, see moves towards risk-based pricing in the vanilla mortgages space.
Banker wrote: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 what I meant. By the way Committe is actually spelt Committee (extra ‘e’).
It might have been central bank based however I was at NAB at the time and we had a whole team sent over there – so did ANZ and I would assume quite a few other banks. NAB Introduced changes to risk grading almost straight away: all business bankers had to go through training to adopt new polices as a result of Basel…
Central bank or actual banks – it allowed the banks to hold less capital in compassion to lending if they adopted the new guidelines – therefore a direct correlation to pricing on a deal per deal basis.
The non-cental banks/regulators were in the crowd, not on the field. That's why they have to resort (now) to arguing from the sidelines about the (new) proposed liquidity arrangements. If you want to get yourself up to speed, Harvard Law has a detailed summary at http://blogs.law.harvard.edu/corpgov/2010/01/07/basel-committee-proposes-strengthening-bank-capital-and-liquidity-regulation/
Banker wrote: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 the 100k difference. Therefore when the market crashes you can hand in your keys with no consequence to your other assets. In the US banks had so many keys being dropped off some had key boxes installed at the doors. In some cases a key put in the box represented a $1.0M loss to the bank. Lots of keys makes a bank bankrupt. In Australia if the bank sells they also have recourse to your other assets and will bankrupt you if need be. Therefore most people will struggle to keep paying – keeping prices stable and avoiding thousands of firesales by the banks. What happens to Black Hotel was a matter of bank in crisis control. They would waive interest in full if required as long as you hold on to the keys – As log as the US keeps lending on this basis their property market will remain at risk. Banker
No recourse to your toerh assets, but this is only part of the story. The importance of your credit score in the US is such that defaulting on your mortgage not only impacts on your ability to get credit, but also makes it very difficult to get any utilities in your own name, a rental property or even a job.
It is simply incorrect to imply that defaulting on a non-recourse loan is somehow without material consequences (in the 50% of jurisdictions that it exists).
Agreed there are a lot of other factors however a huge number of Americans handed keys in without defaulting prior to this on their loans.
If you had a property with a loan of 600k the property is now worth 400k – there is a pretty large incentive to walk away? Without a doubt it triggered massive capital losses for many US lenders.
(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 than destroying your credit record in the US.In fact, if you actually speak to your risk analyts, you will find that a negative equity position is a very strong predictor of default.
(c) Poor credit decisions were the root cause of the credit losses, as they always are.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 the 100k difference. Therefore when the market crashes you can hand in your keys with no consequence to your other assets. In the US banks had so many keys being dropped off some had key boxes installed at the doors. In some cases a key put in the box represented a $1.0M loss to the bank. Lots of keys makes a bank bankrupt. In Australia if the bank sells they also have recourse to your other assets and will bankrupt you if need be. Therefore most people will struggle to keep paying – keeping prices stable and avoiding thousands of firesales by the banks. What happens to Black Hotel was a matter of bank in crisis control. They would waive interest in full if required as long as you hold on to the keys – As log as the US keeps lending on this basis their property market will remain at risk. Banker
No recourse to your toerh assets, but this is only part of the story. The importance of your credit score in the US is such that defaulting on your mortgage not only impacts on your ability to get credit, but also makes it very difficult to get any utilities in your own name, a rental property or even a job.
It is simply incorrect to imply that defaulting on a non-recourse loan is somehow without material consequences (in the 50% of jurisdictions that it exists).
Dan42 wrote:Banker wrote: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 when the market crashes you can hand in your keys with no consequence to your other assets. In the US banks had so many keys being dropped off some had key boxes installed at the doors.
100% agree. Yet this fundamental difference is never mentioned by the doom-and-gloomers, when they predict similar price falls for the Australian market.
Non-recourse loan contracts exist in about 50% of US jurusdictions, not all.
The implosion of US was the result of a massive speculative bubble, fueled by extraordinarily poor lending practices which, in turn, were driven by moral hazard created by the fact that you could swiftly package and dispose of said bad credit through markets prepared to buy and package debt to buyers the world over who were suckered by AAA ratings that weren't worth the paper they were written on.
Banker wrote:*snip*
Banks before BASIL (Basal is a bank term for when banks around the world met is Basil to establish a universal approach to risk grading etc).
*snip*
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.
Probably too late but i would strongly recommend avoiding Bathla Investments, Universal Property Group or any of their associate entities.
Your bank's issue is that they haven't "declined" finance. I presume they are happy to do it at 85% with LMI, so I can understand their reluctance to put something in writing to suggest otherwise.
kum yin lau wrote:Hi, is this Australia you're talking about? Property prices have been flat for 3 years? Where oh where? Can you name some suburbs please? I'm under the impression that even a hole in the ground has gone up in price. My PM actually said that someone might need it for a rubbish tip. And he's right. The holes in Wingfield have gone crazy in price.KY
Sydney generally.
W Sydney specifically
