Liar loans are mortgage loans approved with little to no income documentation. Their name stems from the approval process relying solely on the borrower's word without verifying financial records.
A liar loan falls under the category of mortgage loans that necessitate minimal or no documentation of income. These loans earned the nickname “liar loans” because lenders approve them solely based on the borrower’s statement without verifying income and assets through payslips, income tax returns, or other records.
Lenders routinely question applicants to determine their ability to repay a loan. Misrepresenting details on a loan application might seem like a viable option for those anxious about securing approval, but it can result in substantial complications down the road. If a lender uncovers any discrepancies in the application, they will likely decline it. Conversely, if the lender doesn’t catch the inaccurate details and approves the application, the borrower could end up with a loan that’s beyond their means to repay. Should they default on the loan, their credit rating and any collateral offered will be jeopardised.
Should mortgage brokers be discovered submitting deceptive details in loan applications, they may be subjected to legal repercussions by the Australian Securities and Investments Commission. For example, in 2013, a former mortgage broker in Sydney was found guilty by the District Court for providing banks with misleading statements and paperwork, successfully obtaining home loan approvals amounting to almost $7.5 million. The broker was sentenced to two years of incarceration, to be fulfilled under an intensive correction order.
At KPT Defence Lawyers, we are here to:
1.Advise any grievances related to a mortgage broker.
2. Assist in mediating a settlement for your conflict.
3. Stand by your side during any subsequent legal battles with a mortgage broker.
A liar loan is a mortgage or loan application that includes false or misleading information about the borrower’s financial situation. It can lead to fraud charges if the deception is discovered.
Consequences may include fines, repayment of the loan, foreclosure, and potential criminal charges for fraud or misrepresentation.
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