Bank won't lend due to Credit Default - help needed!

Here's one for the mortgage brokers.

The Broker who can get me out of this mess will be my best freind for life :


Timeline

Nov 2007 - I took out a home loan with Homeside lending for $500K to purchase a property for $545. LVR was 91.7%.

Feb 2008 - I became concerned about rising interest rates and decided to fix my loan for 4 years at 8.29%.

Feb 2009 - I sold the property and tried to pay out my loan but was told the economic cost would be $80k!

Bank said "We're not going to let you sell this property unless you give us some security on this loan". They said I needed to have another property to switch the loan over to.

I told them I wasnt ready to purchase another property. So we came to an agreement ---> sell the property and throw the $500k into a Term Deposit which was going to act as security until I sorted myself out and found another property to buy.


Aug 2009 - I find a nice little house in Carindale, Brisbane. Asking price was $619K. Seller accepts offer of $615k.

I managed to save a deposit of $65k, plus I was going to take care of the Stamp Duty.



Where it gets interesting

- I go back to Homeside and tell them I've found a place to buy and I would like to use my existing mortgage of $500K, plus borrow an extra $50k. Plus I was putting in $65K.

- They do the sums and on the surface everything is hunky dory. Low expenses, great cashflow.

- 4 weeks later they come back to my mortgage broker and tell him that I have a $400 credit default against my name....listed with Veda Advantage.

To cut a long story short, I had two outstanding accounts with utility companies from a couple of years ago. I paid these accounts immediately as I did not want my property purchase jeprodised. They were genuine oversights.



The Clincher

- Homeside push my application to Genworth (their Lenders Mortgage Insurers) and they flat-out refuse to insure my mortgage because of the past credit defaults.

- so I tell my broker "they do know I already have the loan right?" He said yes, but that they don't care and there's nothing he can do.


- back and forth we go for days, trying to fight this....trying to get Homeside to swing some influence. Trying to get Genworth to see some common sense. We go all the way to the Homeside State Manager...but zilch...nothing.

Homeside tell me I either come up with the 20% deposit and avoid LMI or get lost.......lovely


So my deal fell through......and there I was, with a $500K home loan that couldn't even buy a home....Paying $3600 a month on a loan that was literally useless.....


So where am I today

Once it became apparent that my situation was hopeless, I decided to pay the economic cost and walk away.


Now I'm back in the market looking for a home and a lender who will lend. And I'm a little worn, weary and bruised.

I have a good deposit. Very solid income. No credit cards, no car loans, no personal loans.....I'm rock solid....well, I'm rock solid with a credit defualt to my name....

apparently I'm worse than a crminal....lol

Which leads me to my question - what is the way forward from here?

How do I avoid Insurers like Genworth who are showing absolutely zero tolerance towards any type of credit default?


Looking for some help....


Cheers
George
 
I did mention something a little while ago - nab homeside and cra defaults with LMI deals wont get approved. It wouldnt matter if it was an $80 telco and an oversight. They simply wont do them - period. end of story. In your case - yeah you were stuck due to that fixed.

You'd need a lender with in house signoff or self insure. I'll update this thread with more info shortly.
 
Mortgage insurers are tough work these days. Keeping LVR under 80% will avoid them but if that's not doable, you need to try and stay within 'open policy'. For example, NAB has open policy (which means applications don't always have to go to the mortgage insurers) whereas HomeSide doesn't. NAB uses QBE (HomeSide uses GE). You could try NAB at the lowest possible LVR (try and get under 90%) to see if it gets ‘system approved’. They are focusing more on credit scoring so things like time at current residence and in current job are critical. Monthly income surplus is less of a concern (as there’s no relationship between monthly income surplus and default rates).
 
no real suprise with Genworth. What gets really annoying is how long the file takes to get to their desk only to be knocked back :mad:

I have a sneaky suspicion that 90% might be you best outcome which would mean chipping in a little more for LMI.
In regards to NAB's "open" policy, I think it may not pass muster due to the defauts. I say defaults even though you mentioned a $400 amount as you then went on to claim it was 2 utility companies. As such I assume they are 2 defaults recorded.
Reason/s for "oversight" would be needed before making any calls on the chances of anything over 80% being a chance of approval.


Regards
Steve
 
See your solicitor. Ask them to have the telcos consent to set aside the judgement. You may need to initiate a hearing date at the courts. If you have paid the bill a while ago generally you will not have a problem. Within 4-6 weeks you will have a clear credit rating. PM me if you need assistance.
 
See your solicitor. Ask them to have the telcos consent to set aside the judgement. You may need to initiate a hearing date at the courts. If you have paid the bill a while ago generally you will not have a problem. Within 4-6 weeks you will have a clear credit rating. PM me if you need assistance.

I'm guessing by original post the defaults were only paid when they come to light. Depending on circumstances the solicitor track may prove fruitful. Having said this, the circumstances may indicate that a certain "traditional" lender look at it.
 
Hi George

I am very sorry to hear of this very complex situation, resulting in no benefit to you

There is a company www.wefixcredit.com.au which emails me - I have no connection with them, no idea of their charges, but if they do what their name suggests they may be able to help.

Or, as oc1 suggests, perhaps you can apply to have the default removed from your credit record by the utility company - but if you had not paid the accounts, and if they had sent reminders, then there is probably not going to be much joy with them.


There certainly are lenders and insurers which can tolerate a $400 paid default. You haven't said whether the deal would be a full doc or a low doc loan. I had a low doc customer declined last week because he had two paid defaults - the default listed in July, 2006 and paid in February, 2007 - and the lender said that they could tolerate one default, but not two.

Lenders and insurers attitudes to defaults is quite complex. Much will depend on the overall character of the application. As you are looking at a straightforward purchase with no cash out this would appear to be very do-able despite the $400 paid default.

Best wishes
Kristine
 
G'day All,

Appreciate the responses. A solicitor? At $200 an hour......oh man, really, I'm gone mentally.....spent.....Genworth/Homeside shook me good

I paid $30K to walk away from these b**tards because of a $400 credit default.............and I HAD THE DEBT already

The Wizard of OZ had a more believable script than this


Bradsdad - 2 credit defaults. $140 with Origin Energy (gas from Feb 2008).....$260 AAPT (internet/phone from Dec 2007). Like I said, they were genuine oversights......but who cares two hoots right....these guys pick and choose their business.


Btw, I tested the system afterwards....applied for personal loans with GE, Aussie and CBA....VEDA....VEDA....VEDA............"I dont meet their risk profile"

Can't get a $20K loan, but I have $80K in the bank....lol......oh man.........this world is screwed

maybe its karma.......don't know what for though


Bradsdad.....I'll email you the info you're after



George
 
Appreciate the responses. A solicitor? At $200 an hour......oh man, really, I'm gone mentally.....spent.....Genworth/Homeside shook me good

You'd get it removed for anywhere between one and two thousand bucks. Then you will be back to where you want to be so that you don't have another similar experience. Seems a good way to go if this episode has you "mentally spent".
 
One of the up front bits of advice that wont work now is when addressing the defaults, the lodger will many times remove them if you make it a condition of payment.

You will be told lots of reasons by different folk, but in general, if the debt hasnt been passed to a collections agency, or onsold, you can usually get it removed.

Doesnt help you know.......the LMI folk are getting very though, the lenders partly just as bad. Had a 40 % full doc lvr knocked back coz client had a 550 telco default.....................

ta
rolf
 
George, I agree with others that you have to get your credit file cleaned up at whatever cost.

One thought I had is that I think there are pretty strict conditions to be met for listing a default, eg they must have gone through a certain process of trying to collect the debt. (At least I assume so!)

Is it worth arguing with Veda Advantage that you weren't aware of these items because they hadn't gone through the appropriate procedure (notices, etc) for collecting the debt? Presumably Veda Advantage would then go back to them and ask them to substantiate it; just the thought of having to prove it may convince them to withdraw the listing. ;)

And I can only wholeheartedly endorse buzzlightyear's suggestion about signing up for an alert on your credit file.
 
Btw, I tested the system afterwards....applied for personal loans with GE, Aussie and CBA....VEDA....VEDA....VEDA............"I dont meet their risk profile"





G'day George,

"testing the system" will have caused 3 more entries on your CRAA along with the enquiries from Homeside and Genworth. Although they can all be explained, it would be prudent to minimise any future enquiries for now.

Regards
Steve
 
On related... we did a car finance 2 weeks ago at 'normal' rates for a paid default of 1700 (showed paid about a week before the application went in, and the default was @3 months old from a telco). But that was thru a contact I have in a caryard who got it thru for me. Setups were around $1500 though.

But agree with Steve, doing numerous applications is only going to screw you up more. Makes it look like nobody wants to give you money and you're going from lender to lender.
 
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Emails to lenders

Hi

Thought I'd update this with a few lenders replies as I asked them all the same question:

Can you please advise current policy on looking at loans with LMI if the client has credit defaults. I.e. tolerance limits, max lends/lvrs etc

The replies are:

NAB H/Side - From what I know anything with LMI and a default they're not interested in - thats been stated for ages now - this is yet another case in point.

Westpac - Maximum LVR with defaults is 90% for Westpac. Any defaults must be paid in full and an explanation from the client sent with supporting docs. This is policy but the Mortgage Insurers will still look at the strength of the deal, the amount of the defaults and when they were paid.

CBA - For inhouse approval up to 80% full doc,the CBA will consider 2 paid Non financial institution defaults up to $500 in total and 1 paid non
Financial institution default up to $1000. [Then I replied asking what if they're over 80%] It would be advisable not to refer deals with paid defaults for Genworth consideration. If servicing is not an issue,would suggest establishing a security family equity structure to avoid LMI and secure 100 % of the purchase price.


St George - 3 or more defaults no more that $1K, paid or unpaid, is unacceptable under LMI.

M/Ezy - There is no policy as such, if the clients have anything over a $500 default you will find it very difficult to get LMI regardless of LVR unfortunately. I would need to know the specific deal and default to make a judgement.

ANZ -rang up as no reply yet- no set policy but needs to pass the scorecard. This is not just for LMI but to start with the bank then onto LMI. Defaults impact the clients scorecard heavily. If you fail the scorecard then wont do it, and likely >1 default will fail you. Full info needs to be surrounding with explanations and so on.


So hope that gives a bit of a guide
 
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Thanks for the research Spectre...there might be a couple of options there. Will also try to clear my name as OC1 suggested.

Btw, I wonder what ANZ's scorecard is after OPES Prime.

Or how about CBA's scorecard after Storm Financial


....something about a goose and a gander
 
Remove Default as Condition of Payment

I have recently discovered I have a default on my credit report which has just been passed on to Dunn and Bradstreet. However, they have not yet contacted me to organise payment. I have organised for Origin Electricity (lender in question) to send out a bill for the original ammount to my home so that I can pay the ammount in full, as this was purely an oversight when I moved house. How would I go about making it a condition of payment that they remove the default on my credit report as suggested by Rolf Latham?

I would hate for this to end my plans for a home loan in the next couple of months. I hope I haven't taken away from the main thread but this is the first piece of useful information i have found and I would hate to end up in a similar situation.

Any feedback would be greatly appreciated.
 
Hiya Carrots

Once the file has gone to collections, its harder to get it cleaned up because often u now have 2 things to address.

But play the game, and get a commitment from both parties that it will be removed b4 payment, especially if you can show that they didnt mak much of an effort to contact you post move, eg who is ur current energy supplier

Recent Telco example 1300 bucks, client paid, telco removed theirs, but the collection agencies later and higher default was still there.

ta
rolf
 
Here's one for the mortgage brokers.
The Broker who can get me out of this mess will be my best freind for life :
Looking for some help.... Cheers George



Hey, George

After the last couple day's drubbing on this Forum I could do with some new friends!

And guess what!!

Today, while I was amusing myself ringing twenty lenders to source a deal (anyone for mud brick out in the regionals?), out of the blue, one of the BDM said 'By the way, we take defaults, too!'

'Do you?' says I 'Tell me more!'

He said:

Defaults are OK
Full Doc loans
Default must have been paid at least six months prior to the Application
No more than $1,000
Borrower must have 5% Genuine Savings

How does that sound?

This lender will go to 95% inc LMI for any customer, not just existing customers

Good rate, discounted SVR or some fixed options (I know you like fixed rates!*!)

Good set up costs, modest $1,500 DEF (I think he said up to 5 years ... can't read my own handwriting!)

Anyway, email me if this sounds interesting to you. I have never dealt with this lender before (tell a lie, I refinanced a customer away from them about two years ago) but the BDM and I discovered we had about 15 common acquaintances including the salesman who I dealt with when I built my exec rental ten years ago and who went on to become State Sales Manager for a very high profile builder in Melbourne.

So if the BDM eats toast and vegemite he must be an OK bloke, right?

Cheers
Kristine
 
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