LVR question for a bank guru

[cms]

I have had a phone conversation with a company today who have told me that banks are required by law to annually review all LVRs (surely this means they need to get valuations done on every property every year?), and therefore if my LVR goes above their threshold, they will call in the loan regardless of serviceability.
I have a property that have had it's capital value drop significantly but we are fine with serviceability.

Any thoughts?

Thanks
Cathy

 

[Rolf Latham]

I have had a phone conversation with a company today who have told me that banks are required by law to annually review all LVRs (surely this means they need to get valuations done on every property every year?), and therefore if my LVR goes above their threshold, they will call in the loan regardless of serviceability.
I have a property that have had it's capital value drop significantly but we are fine with serviceability.

Any thoughts?

Thanks
Cathy

Im not a guru in this area, but I call the bluff on that one

Sounds lke a non bank lender looking to sell the benefits of a lack of an a"ll monies clause"

BTW, almost all mortgage backed loans have these forced default provisions............

ta
rolf

 

[Peter_Tersteeg]

Can't say I've ever heard or read anything about this. I'm fairly certain that lenders don't do this in residential mortgages and even if they do, it's not enforced at all.

Lenders often do conduct periodic reviews of commercial mortgages, but there's no law that states they need to do it.

 

[Terry_w]

I am a lawyer and broker but have never seen this happen or even heard about it happening. Not even sure if it is possible.

Report the company to the ACCC.

 

[Jamie M]

Hey Cathy

Sounds like rubbish to me.

Can you think of any reason/benefit behind this company making such a claim?

Cheers

Jamie

 

[cms]

Oh I've found lots out and will indeed be reporting them to the ACCC. I have a property in Moranbah and was sent a generic email by an RE agent with general area updates - it included a link of anyone is having difficulties and needs to investigate strategies ( this is not us, but I thought I'd call anyway). They told me they can't help me, but my property is worth far less than I think, and recommended I go immediately to my bank manager and declare my hand so I can sell off all my property sooner rather than later). They said that it's not only servicing, but LVR too and mine is well beyond acceptable ( which I know). They said better for me to pre-empt bankruptcy now rather than have it forced on me ( they said definitely within the year the bank would come knocking). I felt like crap. Called my mortgage broker - he said rubbish, as long as I am meeting repayments, the bank doesn't care, and bankruptcy is a last resort even for the bank.
Called my PM who said they have heard this from other landlords ( about the company) - said that it is a property owner who made lots of money in the boom and is now trying to cash in on others misfortunes.
However - I've been left to feel horrid for several hours yesterday - and others may take this advice and make some poor decisions. Grr...

 

[perthguy]

I've been left to feel horrid for several hours yesterday - and others may take this advice and make some poor decisions. Grr...

Wow, that is a horrible experience. Please report them straight away. I am sure there will be people sucked in by this. So wrong!

 

[Peter_Tersteeg]

Given the property is in Moranbah I can appreciate that the banks would want to get it off their books. They're probably bluffing though, making threats to get you to offload it.

There may be some provision somewhere that says they can review the loan, but I've never seen this happen on a residential property.

A complaint to the ACCC may get them to back off, but it's not going to have any 'real' outcome.

 

[Brady]

So REA send out generic email that scares people into selling, what happens next they swoop in for the sale and bank the comm?

Surely this doesn't work.

 

[perthguy]

So REA send out generic email that scares people into selling, what happens next they swoop in for the sale and bank the comm?

Or wait for the owner to list and buy it on the quiet? I have seen that done before.

EDIT: looking at the original post, it looks like it was by phone "I have had a phone conversation with a company today". REA did not want to leave a paper trail?

 

[cms]

To clarify, I receive emails from a REA ( not the one my property is managed by) who keep interested people updated on Moranbah. Their last email had a link to a website of a company who offer assistance to those who are struggling. I left a message with them and they called me back. They did mention that all of their upfront services are not charged for, but once I decide to stop paying the mortgage ( their advice) the rental income goes " towards their fees" ( so doesn't even cover them). Apparently after I have stopped paying the mortgage for some time, the bank will repossess, but because the debt is so large and I could never hope to pay it back ( generic situation - this is what they do for anyone), the bank will write off the debt as " they have discretion and allowances " to do this. And you don't go bankrupt because if your PPR is in a trust, they guarantee that their method is " bullet proof " and you get to keep it.
Desperate people would want to believe these things and buy into it, I assume.

 

[cms]

Again to clarify, I cannot say that the REA is aware of what the company does.

 

[perthguy]

To clarify, I receive emails from a REA ( not the one my property is managed by) who keep interested people updated on Moranbah. Their last email had a link to a website of a company who offer assistance to those who are struggling. I left a message with them and they called me back. They did mention that all of their upfront services are not charged for, but once I decide to stop paying the mortgage ( their advice) the rental income goes " towards their fees" ( so doesn't even cover them). Apparently after I have stopped paying the mortgage for some time, the bank will repossess, but because the debt is so large and I could never hope to pay it back ( generic situation - this is what they do for anyone), the bank will write off the debt as " they have discretion and allowances " to do this. And you don't go bankrupt because if your PPR is in a trust, they guarantee that their method is " bullet proof " and you get to keep it.
Desperate people would want to believe these things and buy into it, I assume.

Wow. That is quite the sales pitch. I wonder how many people fall for it?

 

[Jamie M]

Surely this doesn't work.

Scary to think it probably does :-(

Cheers

Jamie