ASIC warns on fringe brokers
A survey of home owners struggling to meet mortgage repayments has found cases of fringe brokers engaging in “equity stripping”. Borrowers are being asked to sign blank documents, hit with charges rates of up to 20 per cent of their equity and even being refinanced to loans where the monthly repayments are higher. Conducted by the Australian Securities and Investments Commission, the study followed the experiences of 14 borrowers and analysed the fees charged by two brokers who promote themselves as refinancing experts. The minimum brokerage fees charged in the examples was $20,120 compared with the $670 that ASIC says is typically charged by a mainstream broker. In many cases the borrowers simply dug themselves into a deeper hole and were forced to sell their homes within a year.
Source: The Australian Financial Review