Pascometer red lines on liar loans

Weeoo, weeoo, weeoo. Lol:

I have a “liar loan” – a mortgage based on less than absolutely factual information. I’ve pretty much always had liar loans. And I recently obtained a “liar credit card”. So what?

Given readers’ (and therefore the media’s) love of stories that combine housing and doomsday scenarios, investment bank UBS received saturation coverage with its idea that $500 billion in “liar loans” are a hanging over the Australian housing market, set to come crashing down on the economy at the first hint of trouble and damn us all to hell.

Oh, I don’t doubt that a fair proportion of mortgage applications are less than “completely factual and accurate”. On the basis of a survey (yes, yet another survey) of 907 people who said they took out a mortgage in the past year, UBS reckons 32 per cent of mortgage applications are less than totally ridgy-didge.

Mine have never been. Do you know with complete accuracy what your monthly expenses are? I don’t. Faced with another interminable form, I make a rough guess. It would not be accurate. I’m very impressed that 67 per cent of the UBS survey respondents claimed they really know – more power to them and an apparent ability to budget that eludes most of us.

…Given the Australian Securities and Investments Commission and the Australian Prudential Regulation Authority are waving their sticks at the banks and the institutions themselves having the odd concern in the present open season on bank bashing, it is very reasonable to think there’s been a tightening of prudential standards – but the UBS crew would have you believe the opposite has happened, that standards have loosened.

I don’t believe it. And the evidence that actually exists – as opposed to anecdotes – indicates we’re far from being awash in American-style liar loans.

Loans that are in real stress – not the vague, concocted “I don’t have spare cash” mortgage stress purveyed without questioning by 4Corners last month – are running at a relatively low level. Most of the real stress is in Perth and towns that were dependent on the resources construction boom, the relatively limited areas that have seen a rise in unemployment. Nationally, we’re doing rather well.

…It’s nine years since Steve Keen’s infamous 60 Minutes interview scaring people about an imminent 40 per cent crash in housing prices with Armageddon to follow. And in between there have been interminable Harry Dents and perma-bears promising that, any day now, Australian housing and banks were set to implode. We’re still waiting.
Meanwhile, back at the UBS survey – really? We’re surveyed to death. How many people want to do the work to supply detailed financial information about their mortgage application and, apparently, admit they lied? Something isn’t adding up.

…And then there’s the UBS claim that people were actually finding it easier to get mortgages this year than last. Hmmm – how many people in their survey took out a mortgage in 2016 and took out another one in 2017? Just wondering.

No, it doesn’t seem credible – altogether too amazing that prudential standards have gone in the opposite direction to the pressure being applied. Maybe that’s why it was such big news.

And it looks like I’m not the only one that doesn’t believe it. In the two days says the UBS survey was the front page lead, bank shares have done very nicely indeed. CBA, the bank with the biggest housing book, has seen its shares rally three per cent. ANZ, the one allegedly stuffed with liar loans is up nearly two per cent.

No, the market doesn’t believe it either.

I noted this morning the strangely calm reaction of debt markets, especially so versus last year’s Tepper/Hempton sting. I take little comfort from it and put it down to Australia’s relatively good global position in the dash for EM cash right now.  It’s not that markets don’t believe UBS, they just don’t care while money is being made.

Bubbles like that in Australian housing are only possible with mass fraud so it is perfectly logical to find it. It’ll matter when it does. It sure seems to matter to locals:

In the meantime, perhaps somehow can arrest the Pascometer for repeatedly defrauding his lender.

Weeoo, weeoo, weeoo.

Comments

  1. sure, but the real lesson is funnier right. this schmuck can admit to a crime in the pages of the SMH, and nothing happens. Best of luck to normals when they try the same trick in bankruptcy court. i suppose being a top fluffer for the ponzi has its perks.

    • He’s only admitting to the grey area of ‘monthly expenses’. Thats no big deal. If he admitted to omitting information about loans/debts with other banks, then yeh, no need to arrest. The bank would have its own way of extracting a pound of flesh if they want it.

      • Would love to see in tomorrows paper that Pascoe has had his loan called in. Wonder what he would write if that happened?

    • I looked up some of the events around the wellard class action yesterday, journalists are into it up to the tops of their biros
      the smh makes the observation of another bullshit hoax from wa.
      this record defamation payout as a penalty, will have plenty pooing their pants, as pascoe is.

      • Took me more than 3 clicks. Too much effort. Something about stock price crashing and cattle prices being rubbish. Connection between journalists and bad stock price unclear. This is the 21st Century WW, don’t make me work. 144 character or less summaries always. Preferably presented as a dichotomy.

  2. He has a mortgage? You’d think being a Savy investor he’d own his house outright by now, he ain’t no spring chicken.

    • Not at all. If you’re one of the clowns who believe that housing is heading into stratosphere 4EVA then you remain levered to the eyeballs.

  3. My understanding is that the UBS survey was quite specific in that respondents had underreported income, which is surely more serious.

    When I went for my house loan, aftr sending in all the documents, a woman from the lender rang up to ask me about an undisclosed deduction on my salary given I said I had no debts. It was my superrannuation. Idiots.

    • PlanetraderMEMBER

      ajostu
      You have just pointed out a significant flaw with the UBS study. You can under-report your income all you like but the banks need to see proof – so you can say you earn $100k but if you can only produce payslips etc which show $50k they will use $50k.
      Pascoe is correct about expenses – banks use a standard (which I know is too low relative to what people actually spend) if you try and understate your expenses.
      Same goes for other assets as for income – you can report all you want but need to be able to back it up.
      Now while i think we do have an issue with thousands of people unable to afford what they have by way of mortgage, try getting a home loan today without any proof of income/assets.

      • I know several people who have used software that allows them to edit PDF documents so they could go back and alter their payslips; change their job status from casual to full-time, even change their hourly rate and income.

      • Actually there are plenty existing reports on the systemic nature of income inflating mortgage brokers. Quite a few court cases as documented by 4 Corners last year. And then there was the articles of foreign borrowers with unverified foreign income.Oh how quickly we forget. And one more thing anyone with a computer can generate false income documents.

    • mate they are not idiots.

      you know, and i know, that this girl has a quota of calls to make every month as part of their ‘risk’ controls. you know, and i know, this is tracked internally, and somewhere makes it to a report that says the bank is ‘super checking’ on everything.

      so why the hell would they call you? control fraud would be my first guess. You subvert controls to get the reporting you want. in this case, the girl who makes the calls, her supervisor understands what the report needs to say at the end of the month.

      ‘they were so through, they ended up calling a guy about his super deduction…’ – chuckles all around and pass out the bonus checks.

      • The Traveling Wilbur

        This.

        Which is why if you work in finance and are actually expending real effort during your day job then you’re doing something wrong.

  4. I love Australias culture where a “top finance guru” gleefully mocks defrauding financial institutions and no body blinks an eye.

    Just too much wink wink nudge nudge in this country to think any of this BS is sustainable or collectively wise.

    • I don’t know why ‘Australians’ are fighting the Chinese takeover. The culture will ultimately benefit (or be wiped out)
      Either way, less nudge nudge wink wink… a better world for our kids

  5. reusachtigeMEMBER

    The author of this newspaper story is correct, no one cares and she’ll be right. Youse are all negative nancys clutching at straws.

  6. so if the banks or regulators ever take you to court over lying on your loan application you can point to this article and say well you guys never prosecuted him, so i did it as well. I think there is a precedent in law that if a “law” is not upheld by the authorities despite being known to occur you can make a case to avoid being charged. something like that.

  7. Rational RadicalMEMBER

    Unbelievable that charlatans like this are able to print their implicit defamations week after week. Are we really to believe that the MOST over-indebted household sector of ANY current account deficit nation in the world, with the MOST unaffordable housing in our own history, and nearly that of the whole world on nearly all independent global measures (eg. from IMF, OECD, WorldBank etc), with terminally deteriorating prospects of households and consumers, with one of the least diversified economies in the developed world, and with economic/financial regulators scurrying around left right and centre to cover-ass, many explicitly admitting and describing the housing bubble, is NO CAUSE FOR CONCERN?

    If the circumstances in Australia right now are not cause for concern, or constituting a bubble, then where the hell in the world is? And yet global aggregate real estate and debt indices are all higher than they were at the peak prior to the GFC collapse. I’m technically qualified in neither economics nor journalism, but I can bat down this absolute rubbish in my sleep. How is he allowed – let alone paid – for spouting such nonsense? Oh, that’s right, he is paid BY the real estate establishment. And more importantly, he has staked his whole reputation on not looking outside of the Chicken Coup. Presumably saying so makes ME liable for defamation.

    I’ve referenced it so many times now, but the Irish Banking Inquiry showed how destructive and culpable mainstream media views like this were in the lead up to the real estate collapse. Unbelievable. Who else is keeping a stock of links for later prevention of attempts to re-write history? I guess MB has the catalogue 🙂

    • when i first saw this, I thought the exact same thing. but something more interesting may be happening… we know pasco is a paid fluffer for FIRE. ok. sure, might be a virtue signalling scumbag, but i don’t think he is stupid. so what could be happening?

      i think this is like the last days of the hilary campaign. when ostensible allies start using language like, ‘trump found to lie more than hilary by x%’. its like a sneaky way to distance yourself from the people who, everyone apparently professes to believe are the shit, but you know are shit. this is the moment when the all blacks start to doubt they might win, and individual players start engaging in heroics, and no one sticks to the plan, because no individual wants to be blamed.

      articles like this are, ‘look, i’ve been doing the same’, but everyone can hear the hollowness. this is the pasco hedging his own dumbass-ness, i.e. he does not believe anymore. but he cannot come out and say this, because what if nothing happens again? we all saw what happened to keene.

      this is the pasco distancing himself from FIRE, because if he was also a victim, who can blame him – but written in a way that hedges.

      no one believes anymore, but no one can say that the emperor has no clothes yet. this is possibly that moment, when the previously dominant mob starts to wonder. can feel the fear in the real estate business, with insiders coming forward, and people starting to blame apra. this is the start of a cya narrative, also known as the thing you do when you no longer believe, and you don’t want the blame, but don’t have the balls/integrity to speak the truth.

      this may be the ‘snickt’ moment, think wolverines claws coming out in an x-men movie, which says narrative has changed, and he who panics first panics best. risk off, for my money.

    • davidjwalshMEMBER

      couldn’t have put it better myself RR. I was in Dublin when the then government brought down its first post GFC budget. Saw the direct telecast. Anyone in Oz who thinks this ludicrous bubble can be supported indefinitely and that there are no consequences for the ponzi should spend a little time going back and seeing what did (and is continuing to happen) in Ireland

    • Jake GittesMEMBER

      Re Pascoe – not surprising it’s Strayan smugness on a grand scale.

      Re AI – the CEDA report was PR BS. It made a huge noise but on examination it had many gaps and flawed assumptions, the biggest is that Australia resembles a developed economy like the US or Germany. The other fault was it adapted a Silicon Valley meme that IT was destroying the ‘paper govt’ of rules and there was nothing that could be done. This is a form of megalomania in IT and as we’ve seen with BTC and China, it perplexes its adherents when it doesn’t follow the script from the cult leader.

      Australia is ~3-5 years behind US and Europe in terms of technology and the workplace. This occurred with cloud adoption too. Gittins is right on the present but also smug about the difference between Australia and elsewhere.

      What can be said is that if CEDA is a tanking thinker.

      • The smug BS and vacuous hype around AI goes considerably farther than CEDA, and certainly includes Frey and Osborne along with the flood of ‘AI singularity’ scenarios dreamed up using Frey and Osborne as a jumping off point.

    • The people that write these automation pieces must never have spent any time in an actual business, or have any actual knowledge of how IT acts on business processes.

      The idea that a ‘robot’ could replace any given person in a normal business is a completely misleading and stupid concept in the majority. The assumption seems to be something like “Work processes will stay as they are, and robots will substitute for incumbent humans one by one”. So our Accounts Payable team of 10 will progresively be replaced by robots till there’s none left. If and when large-scale automation happens, it is FAR more likely that entire processes and industries will be re-engineered. Sure the jobs may disappear, but it is asking the wrong question to ask “what current jobs will be replaced by automation”.

      The problem is that to achieve such large-scale reengineering of existing businesses takes decades, and depends less on the efficacy of the technology, but more on the ability and willingness of humans to actually implement the change. Across these timescales, it is FAR more likely that instead of existing businesses being automated/robotized, they will be displaced by new businesses that take advantage of these techs from the get-go. And that is what has been happening since 2000 at least.

      • What businesses are those?
        The example most commonly given by the bloggers and in comments is the self-service checkout, effectively the shop getting their customer (i.e. a human) to pack groceries rather than a checkout person, so no reduction in human effort.

        Counter to that, the rise of Uber Eats and Deliveroo is labour moving in the opposite direction – from a consumer who used to get of the couch and collect takeaway themselves to a modern day serf who is paid to collect takeaway for people.

        In the mean time, it seems that far more business process re-engineering results in jobs being offshored somewhere cheaper than actually outsourced. No doubt that’s got some way to run, but it will eventually have its limits, as shown by some manufacturing returning to the US after a twenty year exile due to increased costs in China.

      • So much of the commentary is around which job types might be replaced e.g. clerks, paralegals, project managers, accountants etc. Forget stuff like checkouts and fast food, I’d buy some of the probability of those being automated.

        What I’m saying is that the white-collar jobs are not fungible. They are actors in a process and it would be far easier to reengineer the whole process than it would be to replace individuals in that process with ‘robots’. Much of the commentary appears to miss this point entirely. And if you accept that premise, then the advance of automation into existing businesses will be an order of magnitude slower than what most of these futurists are predicting.

      • Its already happened on a large scale. There is only a fraction of the secretaries in business as there used to be. Most execs have a PA these days and often share one. Most do their own typing. Truck drivers. 20 years time, will only be a fraction of them compared to today Long haul drivers probably the first to go. Truck driver is the most numerous job in the US. Radiographers. Examining X-Rays will be automated by algorithms. This is already happening. Where a bureau employs 5-10 radiographers now, there will be one in the future. Lawyers. This is definitely a step in the right direction. Automatic Wills, conveyancing already exist, will become more pervasive as they become more sophisticated. Anyone who enters data into a computer is a candidate to be made redundant. Data collection is becoming effectively free with the range of sensors, Speech to text etc available to day. I have automated a bunch of processes in a variety of industries and it always leads to less people being required.

        Most of the low hanging fruit has been automated in Financial industry (but not other industries), and they are no looking at automated loan applications and investment decisions based on heuristics.This is really encoding the decision process an adviser would go through.


      • Most of the low hanging fruit has been automated
        .

        Yes, exactly, in most industries, by the mid ’90s including, as you said, secretaries. Much more to difficult to actually remove human labour going forward from here. With any luck, truck drivers, and some of the entry level legal stuff.

        I saw a presentation by a Deep Learning specialist last year on their implementation of computer vision to identify a single condition in a chest scan. Two years work, and the thing could sometimes identify a condition chosen as the easiest for a computer to identify. Fair way to go on that front.

        re: Data collection. So far the development of better cheaper sensors has lead to data being collected that wasn’t collected previously, and has actually created work, as there aren’t enough people to analyse what’s collected or figure out what it’s useful for. That seems to have a very long way to run, and problem only gets larger as sensors proliferate.

  8. “…they just don’t care while money is being made…”

    This is the essence of it and these same conditions tend to be present at the top of all bubbles.

    Chuck Prince, CEO of Citibank, July 2007: “As long as the music is playing, you’ve got to get up and dance”

  9. Yes he’s been bullshitting on his mortgage applications for years – he lists his occupation as journalist.

  10. Mining BoganMEMBER

    Told youse. Compliant media has gone full harmless little white lie story.

    The carnage continues…