A WA mortgage broker who got rich by “fudging figures” has blown the whistle on the banks that conspired in Australia’s own sub-prime mortgage scandal.
In 2007 Kate Thompson was WA mortgage broker of the year. Now she is facing fraud charges.
It is alleged Mortgage Miracles, in Canning Vale in Western Australia, obtained investment loans for customers by using falsely inflated earnings and assets.
Ms Thompson admits that is exactly what she did.
“I would get upfront commission, I would get a trailing commission. I was probably earning about $5 million a year. It was great. It was wonderful. But it was all a lie,” she said.
But she was not alone.
“Hook me up to a lie detector test and hook them up. I’ll lay my evidence on the table. They will fail a lie detector test miserably. They are corrupt. They are protecting each other,” Ms Thompson said.
Along with similar claims before a parliamentary inquiry in Canberra last week, her evidence has the potential to rock the finance industry.
“Through a series of emails from banks to brokers how to get their deals across the line, make the deal fit. They targeted older people, people on carers allowance, age pensions,” Denise Brailey, from the Banking and Finance Consumers Support Association, told the inquiry.
I would get upfront commission, I would get a trailing commission. I was probably earning about $5 million a year. It was great! It was wonderful! But it was all a lie. ~Kate Thompson
The evidence suggests that banks and other lenders tacitly encouraged mortgage brokers en masse to make up fictitious stories about customers so they could get loans and to falsify their income.
“I do not think there was a bank or non-bank lender that wasn’t doing it. From my files alone, I am certain I could evidence every single bank,” Ms Thomson said.
The allegations centre on low-doc loans.
They were initially designed for the self-employed and small business people – recognising that they can lack documents such as pay slips, group certificates and the certainty of income banks demand for conventional lending.
But low docs became a free-for-all.
“They were very tight to begin with but eventually they were absolutely shocking, no rules at all, tell us what we want to hear, tell us anything,” Ms Thompson said.
As banks competed aggressively to sell their loans, the pitch to the brokers was persuasive.
“I received 4,000 emails, and in those emails from the banks to the brokers you’d see clearly bank officers instructing the brokers how to have no-loan mortgage insurance, no income necessary, no assets and liability, virtually just get a signature on a document, send it in and we’ll give this person, no matter what their income or affordability criteria is, give them a $500,000 loan,” Ms Brailey said.