Bending rules on housing loans
NST 13/6/2005

THE Prime Minister's call for greater care and responsibility by banks in marketing credit cards and property needs the careful attention of all banks and stringent monitoring by Bank Negara.

It is common knowledge that banks use very aggressive techniques to get new credit card holders.
Something similar is also seen in disbursing property loans as banks compete.

When I got a property loan many years ago, it was a difficult process and I had to answer many questions.

Recently, when I took my son to secure a loan, it was a very different situation. Credit officers were ready to approve loans with minimum fuss.

When my son expressed apprehension about the 10 per cent deposit, legal fees, stamp duties and so on, the officer was prepared to get a valuation of more than the agreed price so that a 90 per cent loan on the higher value would be equal to the full price of the property.

Within minutes, the officer was calling the bank's panel valuers and bargaining for a higher value. He also suggested that there were agents who could get a sale and purchase agreement showing a higher value for a small fee.

I spoke about this to an old friend who is a valuer and he confirmed that all valuers are under pressure from banks, with threats that they would be dropped from their panels if they stuck to their code of ethics.

We went around to several banks and their marketing techniques were similar. Maybe this is practised by lower-echelon officers to achieve targets.

These practices will, during a financial dip, lead to non-performing loans and loss of confidence in the property market. Banks, Bank Negara, the Finance Ministry, the Bar Council and the Valuation Board must monitor the situation.

V.R.G.
Petaling Jaya