Two reports from the Australian Financial Review. "Sydney-based mortgage broker Zenik Finance Solution, which made nearly $1 billion in home loans for the big four banks and Macquarie Bank, has engaged in "widespread and systemic mortgage fraud" for years while the corporate watchdog ASIC watched on, a court has found."

"Zenik brokers made fraudulent mortgage applications using fake bank statements and signatures, fictitious jobs and fabricated payslips and letters of employment. It highlights the seriousness of the inflation of income in applications for home loans, a potential sub-prime crisis trigger which has not been fully investigated by the banking royal commission, analysts LF Economics say."

"Between 2013 and 2016, loans largely issued by Westpac and ANZ were used to fund apartment purchases, by mainly local and overseas Chinese buyers. While the case did not deal directly with fraud, evidence revealed the prevalence of fraud."

"An external audit by Ashurst tendered in court showed anomalies in Zenik's loan documents. Ashurst also noted that Zenik brokers spoke mainly in Mandarin and while they were given training in English, Zenik did not verify that the skills were understood or put in practice."

"While Zenik loans suffered few arrears, LF Economics Lindsay David said that didn't preclude them from being subprime and a greater ramification is how the supply of sub-prime credit market inflated the housing market."

"'If verifying income was not such a big issue, why are banks doing it now, and why is it that house prices are tanking at the same time?' Mr David said. 'This goes to show that there's excess debt pumped into the market.'"

"It was a warm week in mid-October 2015 at the gaudy Sun City resort in South Africa when Sydney-based mortgage broker Zenik Finance Solution won the big plaudit from Yellow Brick Road's Mark Bouris, taking out the broker of the year award."

"At Sun City, the then Vow chief executive Tim Brown (who went on to become YBR CEO, lending) was lavish in his praise, declaring that Zenik, which had joined the Vow network only the previous year had taken 'this year's awards by storm.' And then it all fell apart."

"Zenik brokers who applied for loans at such a furious pace from 2013 to 2016 had faked bank statements and signatures, cooked up fictitious jobs by fabricating payslips and letters of employment, and engaged in other instances of fraudulent behaviour."

"The regulator, ASIC, was informed but did nothing. Brokers were suspended but loans that were obtained fraudulently remain in the place. The trailing commissions they generated are still being collected by Zenik and Wang. And industry experts say there is probably billions of dollars worth of other loans, also obtained fraudulently, that lurk like a ticking bomb below the surface of the finance and property industries."

"Less than six months after the fun at Sun City, Westpac, St George Bank and ANZ discovered they couldn't validate the income listed in some of Zenik's Chinese foreign buyer mortgage applications. NAB, CBA and Macquarie quickly followed suit with investigations that confirmed Zenik's brokers and customers had used fraudulent documents to obtain loans for apartments."

"In the months that followed, Zenik brokers were suspended – dropped by Vow and consequently unable to get any new loans from the banks. The only public hint at what was going on came when the the banks decided to call time on foreign lending, led by Westpac and ANZ, Zenik's biggest lenders."

"Meanwhile, behind the scenes, the banks were blaming Vow for Zenik's fraudulent applications, Vow was blaming the banks and PIA's Wang suggested Vow was responsible because it was in charge of training brokers."

"Australia's extensive residential market has created a complex financial ecosystem extending from real estate agents and banks to mortgage brokers, developers and, before property prices started their now full-scale retreat, cashed-up and eager foreign buyers."

"At the top of the boom, PIA and Zenik were focused on foreign buyers, churning out about 4000 loan applications between 2013 and 2015 for Chinese borrowers based both in Australia and overseas. The total value of those loans, which averaged $500,000 each, is thought to be about $1 billion."

"It is not clear how many of those 4000 loans were based on false documents but in one case, ANZ declined some 70 loan applications from Zenik for one single development because they were found to be fraudulent."

"In an ANZ review of Zenik loans in 2016, 109 out of 120 foreign applications were suspected to be fraudulent and two-thirds of local applications were also fraudulent. At Zenik, in addition to false income and employment claims, applicants lied about buying the homes for owner-occupation and concealed outstanding debt from the banks. Self-employed borrowers pretended to be employees."

"Internal Zenik audits and employee correspondences also showed some of the applicants' overseas documents were 'produced' out of a factory in China. In some instances, Zenik brokers deposited large sums of monies in bank accounts in order to support fake balances. Three months prior to a settlement of a loan, Zenik brokers or sales agents deposited an amount equal to three months of salary of fictitious payslips."

"Wang held 'church congregation-styled' seminars in Mandarin at PIA's specially built auditorium at 2 Australia Avenue, Olympic Park, on Saturday evenings, attracting 700 to 800 people each night at the height of the boom. The company's motto is 'Prosperity Through Property.'"

"So prolific was PIA's selling, even its sales agents and staff were hooked on apartment investments. One agent with a household income of $110,000 had four off-the-plan apartments all due for settlement in two years and a combined debt of $8 million."