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2 major Australian lenders probe alleged home loan fraud

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2 major Australian lenders probe alleged home loan fraud

Australia &New Zealand Banking Group Ltd. and Westpac Banking Corp. are looking into alleged fraud involving"hundreds" of home loans backed by fake Chinese income documents, The Australian Financial Review reportedMay 9, citing spokesmen at the lenders.

David Lording, a spokesman for Westpac, told the publicationthat the bank is investigating an issue with some loans. Meanwhile, Paul Edwards,an ANZ spokesman, said the lender has identified problems with the income documentsof "a small percentage of borrowers who rely on foreign income." The allegedfraud does not pose any material credit risk, he added.

The fake documents were prepared with the help of dodgy mortgagebrokers, the publication reported. Mortgage brokers associated with the rise infraudulent Chinese income documents have reportedly been suspended by the banks,pending further investigation.

The two lenders have also informed regulators and the policeabout the issue.

Citing its own investigation, the publication estimated thatthe total value of the two banks' loans backed by the fake statements is likelyto be less than A$1 billion, or 0.12% of their combined A$837 billion worth of residentialmortgages.

As of May 6, US$1 was equivalentto A$1.36.