Emails show Macquarie staffers leaned on mortgage brokers to falsify loan applications

MACQUARIE Bank encouraged mortgage brokers to falsify loan applications and use loopholes to get loans approved.

MACQUARIE Bank, at the heart of the nation's emerging subprime lending problems, directly encouraged mortgage brokers to falsify loan applications and to use loopholes to get loans approved, company documents reveal.

Emails between Macquarie and mortgage brokers, exclusively obtained by The Australian, show the lending giant instructed a suburban broker to vastly inflate a borrower's income to $378,000 a year to have a loan approved.

In another email a Macquarie Bank "credit analyst" with the group's mortgages division tells a broker to register a borrower for an Australian Business Number to sidestep control mechanisms.

Macquarie Bank spokeswoman Kristen Costandi has repeatedly refused to comment on those emails.

"Low-doc" and "no-doc" loans, widely abused during the property boom, were intended for business-owners or self-employed people who were unable or unwilling to provide financial information to meet standard loan requirements.

Borrowers were required to show they had held an ABN for at least two years and to provide recent business activity statements.

However, as the property boom gathered pace, prudent lending standards were abandoned by many major lenders and groups such as Macquarie began aggressively targeting mortgage brokers, telling them that they would provide low-doc and no-doc loans to people who had ABN's just "for one day".

In thousands of cases, borrowers with little or no ability to make repayments were given loans of hundreds of thousands of dollars against their homes.

In one email, a Macquarie staffer tells a mortgage broker to use a borrower's total loan size of $378,000 as the figure to be stated as the borrower's annual income.

"Place total facility amount of $378,000 in self-certification area of borrower's income declaration," one email states. In another email regarding the same loan, a Macquarie staffer says the processing of a loan application will continue when "borrower's income declaration" states $378,000.

Despite vigorous assertions by local lenders in recent years that practices in Australia were far superior to global standards, investigations by The Australian have found subprime-style lending practices were widespread in the five years to the 2008 financial crisis.

Macquarie Bank was the driver of the"mortgage securitisation" model -- imported from the US -- and by 2005 the group boasted it had "securitised" about $30 billion of loans. Securitisation involves packaging together large numbers of mortgages and selling them to third-party investors.

Macquarie Securities, the wholly owned subsidiary of Macquarie Bank that handles mortgage securitisation, has repeatedly refused to comment when asked by The Australian the size of securitised mortgages it currently manages.