New software aims to help brokers prepare for tougher lending

The software has been rolled out amid ongoing scrutiny of how lenders and brokers collect and investigate borrower expenses.

One concern that has been highlighted during the royal commission hearings has been the unsatisfactory efforts of lenders in collecting realistic living expense estimates from borrowers.

In response to scrutiny, some lenders have already updated their credit policies, pushing greater responsibility onto the broker to verify a client’s actual living expenses. For example, Westpac Group’s updated credit policy now requires borrower expenses to be captured at an “itemised and granular level” across 13 different categories and include expenses that will continue after settlement, as well as debts with other institutions. The banking group also requires new supporting evidence for applications involving the borrower switching from residential investment to owner-occupier loans.

The big four banks have also released the Broker Interview Guide for Regulated Lending Secured by Residential Property for use by brokers before introducing loans to the banks.

CashDeck has now launched its Credit Ready tool to help provide a clearer process for expenses verification.

CashDeck said: “While nobody can tell exactly what measures will come about, change is certain, and smart brokers will already be making changes to their business processes. Compliance will be top of the list, and for brokers this will mean more accurately assessing living expenses — an onerous task,” CashDeck said in a statement.

“Technology must come into play here, and can do so very early on in the conversation.”

CashDeck’s Credit Ready tool can reportedly save “hours of work” and can be exported to Excel for external use.

“As the system tightens, borrowers will realise that they need to do the hard yards up front. They’ll need to tighten their belts, they’ll need to really understand their spending and they’ll need to save. The best kind of borrower is one who can demonstrate they can live with their mortgage — long before they have a mortgage,” CashDeck said.

The software is the latest in a growing number of expense verification platforms being rolled out to the broker market.

The Opica Group launched its AI-powered expenses verification engine in March to help “protect any broker or lender from a breach of their responsible lending requirements”.

Billed as “Australia’s first responsible lending engine”, the RELIE platform makes use of a specially built AI engine, Sherlock, which analyses a consumer’s banking and credit card transaction data over a period of 12 months and automatically provides “income verification, an understanding of the client’s mandatory expenditure, and therefore their ability to service a loan”.

According to founder Brett Spencer, the platform is needed because “lenders traditionally have been very quick to put blame on brokers for any application that goes sour” and to ensure brokers are protected amid industry scrutiny.

QED Risk Services has also added an expense verification tool to its CompliFast Broker Tools package.

 [Opinion: Scrutiny, regulation and the looming credit crunch]