Thanks for the update...
Out of interest, is there any recourse for Compleks if he/she gets charged penalty interest for a late settlement?
I suppose that there might be a case against the lender who accepted a fraudulent application and subsiquently lodged the default, but it would be very difficult to prove negligence on their part. A late settlement in this case might cost less than $1,000. It would probably take legal action to get any substantial information (they'd probably hide behind the privacy act), so it would cost more than you'd recover.
That lender would also probably (correctly) point out that Compleks did have the opportunity to withdraw his offer on the property without penalty on the basis that the initial finance was declined. Both myself and the solicitor also gave advice to drop this purchase, deal with the problem then go back to the market later and dispite the happy outcome I'd still give the same advice in retrospect.
Any case would probably not be particuarly strong. Also consider that this party has suffered a loss. They've lost money to someone who commited the fraud.
The lender with whom we've been working has done everything correctly and in accordance to both their policies and what would be reasonable expectations. The banks aren't obligated to approve an application.
Our office has done everything right (as best I can determine) and within acceptable service levels. We could insist that every client present us with a credit report before we lodge an application, but given information that Compleks gave us in the application there was every reason to believe that his credit file would be squeeky clean. Also probably less than 1 in 200 people I see has a credit problem of this magnitute and Compleks is the first person in 8 years of trading where I've seen a default that actual is fraudulent.
Even if we had done this it probably wouldn't have prevented the problem as the default was lodged only a fortnight before the application. I first met with Compleks prior to that event, so a recent credit report probably might not have been recent enough. We don't conduct our own credit checks either as I've seen multiple applications where other brokers have done this and trashed otherwise accpetable credit files.
About the only party that could be held truely liable would be the person(s) who committed the fraud. They're already in breach of criminal law and certainly their actions have the potential to cause substantial harm to multiple parties. The problem is you've got to find out who they are first. No doubt the matter has been referred to the police, but with fraud being one of the most common crimes in our country, chances are they won't be caught for this particular crime.
Often fraud against financial institutions is seen as victumless. Clearly that's not the case. In one sence it's a good thing that the crime was detected and Compleks has had his name cleared, otherwise his investing carreer might be over before it got started.
Despite all this, I don't think settlement will occur late. There's still sufficient time to get everything done. This is a good example of why 30 day settlement look good on paper, but things out of anybodys control can go wrong.