Hi Alan, a few years ago you said of me: “a good woman to have on your side.” 

It’s been years between communication.  My ongoing research has taken me into the black hearted inside of our current Banking System and yes, Labor has agreed to push for a well needed Royal Commission into Banks.  We need to catch up.  Your figures may calculate differently after you read this.  My research into Mortgage Fraud shows the following as fact taken from the files of well over 3000 bank victims of Banker driven Control Fraud and speaking with countless more .

Banks do not 'mostly lend four-fifths' of any loan.  Average LVR is around 121% and the debt rises faster than the original FAKE valuation paid for by the bankers.  Overvaluing average figure is $180,000

Bank files show fake figures based on the use of cross collaterialisation leaving the victims exposed to loss of home.  It’s a scam. In fact, as Bill Shorten agrees: It’s a Scandal.  The crime is one of basic "asset-stripping."

Mortgage Fraud is the intention by the Cartel to steal older persons' homes - specifically, those on low incomes who would never apply for a loan.  This class is sought after and spruiked.

We know our research tell us:  that 90% of all loans are Interest Only Low Docs - despite APRA trying to cover up the truth.

APRA are attempting to suggest they are two separate products.  That is FALSE.

Victims are not told the mortgage product they have signed for is an Interest Only loan. The LAF clearly defines the product as being LOW DOC. 

Ask the sellers who will say "one loan size fits all.  We only sell one product and then add LOCs etc to that product."  The mortgage product is called an InOnlyLowDoc but SOLD as Low Doc Mortgage. Most sellers do not know this.  Banks promote the product as Low Doc Mortgage loan and InONly is not mentioned by anyone.  It’s a TABOO industry word but in fact is a reality of the engineering of the product AND a complete shock to the borrowers when they realise after three years they have been snared.  

Recently, APRA released the actual figure for last year:  InOnlyLowDoc's sold in 2016 is $137 billion. APRA is being misled by Bankers to say that "only $1.5 billion are Low Docs."  Bollocks.  Low Docs are Interest ONLY!!!  They are the same product. 

The thirty-year loans are set like a time bomb to explode within 5 years.  Banks have explained this to ASIC but naturally, not to their customers.  The average age of the borrowers is 55-75

A corresponding number of no deposit InONlyLowDoc sold to FIRST HOME BUYERS with 120% LVR.  

The average loan, according to BFCSA surveys is $450,000.  

The average income for our borrowers at time of signing was approx. $50,000 or less per year. Many were on centrelink benefits.

No borrowers in Australia are permitted to fill in their own Loan Application Forms. Why?  They would fill in the truth, and that is problematic for the banks, as the Control Fraud would not work, if that were permitted.

Australia has a 90% exposure to collapse of these loans as per total loan book.

These loans are not only HIGH RISK, but as L F Economics point out they can sink the economy.

Australians who have employment, do save for retirement via compulsory super.

The TARGET MARKET promoted by BANKERS to Sellers (internal/external) are ARIPS:  People who are on low incomes, but own their own home and NO DEBT.  

"Look for anyone (bankers joke) with a HOUSE and a PULSE!"  Executives know that if the Government banned the selling of these fraudulent products "we would collapse."  The Bankers are pumping up the property market for one reason: Gordon Gecko type Greed.  

 Australians will never agree to a Bail Out of Bank Crooks and follow the disaster that is America.  Remember, the CEO's in the USA were bailed out and paid themselves massive bonuses for creating the very problem the Government was left to fix up.  Nice and neat. 

Nice and neat idea but I cannot see us Aussies agreeing to that "hand out." Regulators also suggested the "Bankers had made an error." These are serious criminal offences and must be addressed. Bankers have pumped up our property market to the point of collapse by its misuse of straw borrowers." Time for a Royal Commission and a look at the facts, and not at the FAKE STATS coming from APRA and ASIC.

BFCSA Members are now trying to keep everyone fully informed.   Our collectivism has turned the facts around to show the general public have been fed Fake Stats and we will continue our research to reveal the truth.

Denise L Brailey   denise@bfcsa.com.au

Cap negative gearing and fix superannuation

The Australian 12:00am April 1, 2017

Alan Kohler

Saving for retirement in Australia has become a choice between negative gearing and super. Here’s why more and more people are choosing negative gearing, and why housing has become an inflated financial product.

Actually call it what it is: Australians don’t save for retirement, they speculate.

Over the past 15 years, the median Australian house price — a meaningless concept, but let’s go with it for the sake of the exercise — has grown from $300,000 to $850,000, a compound annual growth rate of 7.2 per cent.

But real estate is always geared at least 80/20, because the bank regulators in their wisdom have decreed that real estate loans are safe and don’t require much capital behind them, so the banks can lend four-fifths of the asset’s market value. Shares can’t be geared much more than 50 per cent, but most people don’t even do that, especially in super.

Anyway, if we assume that that median house price of $300,000 15 years ago was $60,000 equity and $240,000 debt, then the compound annual capital return on the equity component becomes 16.7 per cent. Often the bank actually lends 90 per cent loan to value, in which case the return over the past 15 years would have been a very juicy 22.2 per cent per annum.

Total return, assuming 80/20 gearing, interest at 5 per cent and a rental yield of 3 per cent, would be 15.75 per cent per annum, assuming 80/20 gearing, but that’s before the tax deductions, which depend on the investor’s marginal tax rate and other costs. Whatever that number is for each individual, tax deductions are loved because they effectively represent a cash bonus every year for speculating on property.

Compare all that with the 15-year average balanced super fund return of 5.9 per cent per annum according to the latest numbers from ChantWest. That’s less than the top-line return from real estate, before gearing and tax deductions. And don’t forget that’s the average. You have no way of knowing ahead of time whether your fund is going to be above or below average. You could just as easily be in the one that only managed a 2 per cent return, or even went backwards. Real estate, on the other hand, is less volatile and reliably uniform.

By the way, the 15-year return (capital only) from Australian shares alone has been just 3.8 per cent, about half the capital growth of residential property over the same period.

So even without negative gearing, real estate has been a better investment than both super or shares. Little wonder that the housing market is popular — it’s been the best investment, less risky than super or shares, and supplies a cash bonus every year to boot!

It follows that one way to make housing more affordable would be to make super better, so savers/speculators might focus on that and stop bidding up the prices of houses.

Which brings us to this week’s effort by the Productivity Commission to fix the hopeless superannuation system — and a valiant effort it is, entirely fulfilling its terms of reference, but suffering from the inherently false (in my view) assumption that competition in superannuation is not only viable but desirable.

There are good things in the draft report, especially the bit about making sure employees only get put into a default fund once when they join the workforce, which they keep for life. As I observed yesterday to the report’s author, deputy chair Karen Chester, that must have been one of the easiest recommendations ever made by the Productivity Commission.

But how to choose a super fund? And is it OK that choice means there will be a variety of outcomes for different people at the end of the road?

The PC’s “baseline” is no default funds at all — what it calls “a world of unassisted active choice”. It’s a sort of theoretical baseline that won’t be recommended.

They then provide four alternative models to the baseline, and the first of them is “Assisted employee choice”, whereby employees must choose, but are assisted by a series of “policy interventions”.

Basically it’s a shortlist, chosen by the government, with a system of “product accreditation” that would encourage funds to provide products with a common simple design, which would “make it easier for employees to choose a product that meets their needs”.

Funds that don’t make the cut would be dissolved (I quite like that bit — potentially gets rid of super’s “long tail”).

But what exactly are the needs of employees? Everyone wants the same thing: to have the best possible retirement, and therefore the greatest return over the long term without losing the money. That’s it. Negative gearing is popular, possibly more popular than super, because it’s a better return, safer and easier to understand. Super is a complicated pig in a poke.

And the financialisation of housing means that it is no longer separate to savings: super and shelter are now inextricably linked as financial products for retirement. Not only is the tradeable financial security known as a house widely used as for tax-effective savings, but at the point of retirement the family home is counted as a tax-free part of the family’s ­financial assets. To be downsized.

Next month in the budget the Treasurer is apparently going to do something about housing ­affordability, probably without tackling negative gearing since that’s what the ALP wants to do, which means it will be ineffective.

It’s probably too late to turn this around, because the delicious poison of negative gearing has so warped the national culture that housing is permanently regarded as a financial asset and an essential part of one’s investment portfolio.

But two things are needed to bring some sense to the Australian savings system: a cap on negative gearing, either confining it to new houses or simply limiting the ­deductions; and actually fixing superannuation, rather than just trying to make it more competitive.

That means removing the three-day rule to reduce the need for liquidity, reducing choice and increasing regulation so funds can’t be too different — preferably by creating one national fund.

Future Fund anyone?