PROPERTY LOAN ALERTS
for property investors
and home buyers
Have home loan approvals
become too complicated?
Yes, according to the Federal Treasurer, Josh Frydenberg.
Last Friday he gave notice to ASIC that home loans and
investment loans will be overseen by APRA as from 1 April
2021, and that responsible lending rules will be watered
down or scrapped. His aim is to 'remove barriers to the flow
of credit' and make loans easier to obtain.
As expected consumer advocates are resisting the
proposals saying that watering down lending rules will
encourage predatory lending.
But where's the evidence?
I decided to survey some recent decisions and found that
the current responsible lending rules are fair to both
borrower and lender.
My conclusion is that the rules should be kept but
simplified. To see my survey of the decisions and for more
click on Should responsible lending
laws be simplified or scrapped?
If your bank makes a mistake, do you
The Wernhards must have thought it was Christmas because
when they sold their investment property, their bank -
Citigroup handed over the Title Deeds not only for that
investment property but for two other properties as well.
It was Citigroup's mistake to release the Title Deeds to
the other two properties because the Wernhards still owed
$309,000 to Citigroup.
The Wernhards decided not to tell Citigroup of its
mistake and registered the discharges of mortgage they
received. They soon sold one of the other properties and
pocketed the proceeds of sale, instead of paying down their
line of credit for that property with Citigroup.
Four years later, in 2016, Citigroup discovered its
mistake. It asked the Wernhards to re-mortgage their
remaining property, their home at Watanobbi (near Wyong on
the Central Coast). The Wernhards refused. Not long after,
they ceased to make repayments on their loan.
On 1 March 2019, the NSW Supreme Court ordered the
Wernhards to re-mortgage their home to secure a debt of at
least $313,000 plus the legal costs they must pay to
Citigroup because they lost the court proceedings which
would be in the range of $75,000 to $100,000.
In the light of the penalty interest and the legal costs
payable, their decision not to tell Citigroup of its mistake
will cost the Wernhards well over $100,000 and is likely to
cost them their home.
Should the Wenhards have told their bank of its mistake?
It's hard to tell, because after all, they had the benefit
of the proceeds of sale of the second property which
amounted to $190,000 for several years.
For my case note
click on Must borrowers act
conscionably towards their lender?
Eight words make all the difference if you want a Caveat to secure a loan
A Caveat can be an effective way of securing the
repayment of loan, but only if it's valid.
When a Caveat is registered over the title to a property,
it protects the person registering the Caveat (the "Caveator").
This is because a Caveat prevents the property owner from
transferring or refinancing the property without obtaining
the consent of the Caveator.
Ta Lee Investment loaned $1.5 million to MV Developments
to buy a development site at Lane Cove. It agreed not to
lodge a caveat unless MV Developments failed to repay the
loan on time.
The development took longer than expected to complete,
and Ta Lee Investment lodged a caveat as security for
repayment of the loan.
But in the meantime, MV Development had sold the
apartment upon which the caveat was registered. The buyer
commenced proceedings in the Supreme Court to remove Ta Lee
Investment's caveat, claiming it was invalid because the
Loan Deed did not use the correct wording.
The NSW Court of Appeal ordered that the Caveat be
removed because the Loan Deed did not contain these eight
words: the property is charged with repayment of the
As a result the Caveat was invalid as security for the
The moral is, when a Caveat is used to secure a loan,
make sure you use the correct wording.
For my case note, click on
When the right to ‘lodge and maintain
a caveat’ is not enough
Why interest-only loans are being
restricted in Australia
Australian lenders are tightening credit policies for
interest-only loans ... they currently represent 37.4% of
all residential term loans ...
Loan qualification is becoming harder
Why is it getting harder and harder to make a loan
application? What do you need to do to obtain a loan for a
home or a residential investment property?
There is (almost) no
consumer protection for business loans
Why missing a credit card payment makes it harder to qualify
for a property loan
Pay a credit card or home loan more than 14 days late
after the due date, and the missed payment will be recorded
as a black mark against your name on your personal credit
Mortgage Brokers Bulletin
Not all Mortgage Brokers are created equal, and not all
deliver the best loan offer for your needs that is available
in the marketplace. It is my pleasure to provide...
Do you need credit repair or
debt consolidation? Is it best to use a firm or do it
Once a year, I order my free credit report from Veda, which
holds a data bank of about 10 million Australian credit
files. 3 out of 10 Australians who order their credit report
have needed to do so.