Earlier this year, the Australian Democrats called for a Royal Commission into the Australian banking sector - with a significant focus on low doc mortgages.
"We have often praised ourselves for having a stable banking system, when in reality we have been hiding our own sub-prime scandal," Australian Democrat David Collyer then told InvestorDaily sister publication The Adviser (www.theadviser.com.au).
"This has left us terribly exposed and we need a Royal Commission to find out how deep the problem runs.
"We need to know the size and scale of the problem, so that we can fix it and put the appropriate measures in place to make sure this never happens again."
Speaking to InvestorDaily, RESIMAC chief operating officer Allan Savins said some planners and brokers have dismissed low docs as "unsuitable" under the NCCP legislation, however, this is simply not the case.
"I know a lot of brokers believe low docs will not satisfy the various requirements outlined under NCCP. But, the reality is that there is nothing in the legislation to suggest these types of loans are 'unsuitable'," he said.
"Low docs are still a viable mortgage type. They simply require 'alternative' documentation to the traditional full doc loans."
