Mortgage Miracles Banks

Reporter: Natalie Bonjolo

A financial train wreck. Trust, betrayal, blind faith and now the big boys, the banks.

Pensioners Pauline and John Oldfield lost everything as well as Syd and Panny Thomasson who've been forced to sell their family home and then there are all the others Perth pensioners, pawns in a greedy plan.

When Today Tonight first began to unravel this financial scandal, Kate Thompson was right in the middle of the whole mess. Now, six months since we started our investigation, we've followed the paper trail all the way to the top…the banks.

Kate Thompson's the principal of a business that's gone bust, called Mortgage miracles. She's being investigated by fraud squad and consumer protection. They all want to know what happened to the missing money, but now harder questions are being asked about the behaviour of corporate Australia.

Prominent Perth MP, Mark McGowan, likens the Mortgage Miracles meltdown, to America's sub prime crisis…

"I think the sub prime crisis in the United States was around the banks being irresponsible in their lending practices and I think here we have seen something perhaps a little more sinister where we have individuals deliberately targeting people who can't afford the loans that they've been taking out".

Many of Kate Thompson's customers are pensioners and low income earners and there's hundreds of them. She encouraged them to use the equity in their family homes to mortgage themselves to the hilt and now they can't make the repayments and Kate Thompson made a killing, brokering more than a hundred million dollars worth of mortgages a year. Sadly, it got downright dirty. Some loan applications were false and in some cases, pensioners were given fictitious jobs. In other credit applications, their income was falsified, exaggerated.

Kate Thompson was peddling what's called "low doc loans." Instead of filling in dozens of pages with lots of proof about your finances, 'low doc' applicants don't have to supply much proof at all and the banks don't ask for it either. Now it's the banks which are under fire.

"There needs to be some responsibility put onto those institutions that are providing the finance to make sure that people who are taking out the finance can repay the debt" says Mark.

Now they're in debt up to their eyeballs. Not only did these families take out mortgages, they then agreed to give the money to Kate Thompson. In some cases hundreds of thousands of dollars. She promised to invest it but now it's gone.

"We gave Kate $230,000. She suggested if we gave it to her she would invest it and help us buy our dream home" says Pauline.

In yet another twist to this disastrous drama, Kate Thompson was also flogging properties off the plan.

Slater and Gordon lawyer, Grahame Hancock is organising a class action. So far 50 of Kate Thompson's customers are involved.

"They have been misled in that they wouldn't have to complete the purchases. That the units would be on sold before they were required to pay for them" says Grahame.

The customers make some serious allegations. They say they were told they would buy a property off the plan on a cash contract. While it was being built, Kate Thompson would find another buyer, whack up the price and on sell before it settled. The problem is she never found the second buyer, now settlement is due and they're in the hot seat.

"Most of these people don't have the capacity to pay. They don't have the capacity to borrow the funds from a bank, nor do they have the cash to pay".

They barely have roofs over their heads. In an ironic twist, they fear the Banks which approved these loans in the first place, will now take their homes away.

"The banks shouldn't act in a way that is going to damage these people who have been exploited. I think these people have rights. Let the proper course of the law flow through before they start acting to take these people's homes away from them".

Pensioners and everyday Mums and Dads are just clinging on. Everyone else made money, the banks, the middlemen and the broker. The question now, is what's going to be done about it?

If you've had an experience with Kate Thompson email us at