Three mortgage brokers have been permanently banned from engaging in credit activities for their involvement in home loan fraud.
The Australian Securities and Investments Commission (ASIC) has banned Mr Xiaoyi (Jeff) Zhao, Mr Jun (Leo) Ma and Mr Liang (Victor) Zhang after it found that they were “knowingly or recklessly involved” in providing false employer letters and/or pay slips to Westpac Banking Corporation.
The fraud reportedly led to the finance of $17 million in home loans.
The former mortgage brokers and directors of Sydney Global Investment Pty Ltd (which formerly operated a finance brokerage business in Sydney that traded as X Finance Group) were found to have engaged in the fraud between July 2015 and February 2016.
The fraud reportedly involves 21 home loan applications lodged on behalf of customers of X Finance Group.
According to ASIC, its investigations found that the companies nominated in the letters and pay slips were based in China, the customers concerned were not employed by these companies and pay slips provided income figures that were much greater than the customers’ actual incomes.
The three brokers have the right to seek a review of ASIC’s decision to the Administrative Appeals Tribunal.
ASIC commented: “Since becoming the national regulator of consumer credit on 1 July 2010, ASIC has investigated in excess of 100 matters relating to loan fraud and has achieved many enforcement outcomes against the offenders.
“The outcomes range from undertakings by persons to voluntarily leave the industry to bans and prosecutions.”
Crackdown on expenses
The announcement comes as increasing focus is placed on the mortgage industry relating to expense and documentation verification.
Earlier this month, Westpac made some wholesale changes to tighten up its expenses collection process following ongoing scrutiny from the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry.
The commission was damning in its critique of the lenders’ policies when it came to ensuring customers can afford their home loans, with ANZ being called out for their “lack of processes in relation to the verification of a customer’s expenses”, and both Westpac and NAB revealing that there had been instances of their staff accepting falsified documentation for loans.
For example, it was revealed that there had been “at least 55 instances of Westpac staff either falsifying or accepting falsified supporting documentation in connection with home and personal loan applications, [and] a number of instances of Westpac staff receiving payments from referrers for the referral of customers to Westpac for loans”; while some NAB staff members were allegedly “charging NAB customers a fee for personal loans… made as cash payments under the table”.