Broken promises by bank - need advice.

Hi, I have been dealing with a well known bank throughout the last few months for an investment property. The lender said she could lock my interest rate in for 7.89% for 5 years. I asked her the all important question of how long can she lock this in. She informed my in her email that she could lock this in until settlement. Today, I got a call from her that she could no longer offer me the original locked rate. She told me at best the rate could be at 8.09% fix for 5 years. Now, I don't know about you but I am very upset by this. She broke her written promise. Her reason was that the bank will make a lost because of increase cost at the whole sale market. I find it hard to believe that there will be a lost. What is my legal position here? Any other bank could do better than 8.09% fix for 5 years? I have a property to settle in one month and another in two months. I am in deep trouble if I do not go ahead with the loan through her but I prefer not to because of broken promises.

Your help is greatly appreciated.
 
I settle on my ppor in 7 days so its a recent experience for me.
I paid for something called ratelock. $200 for two months before settlement.

I suspect you are boned. Read your paperwork.
 
I settle on my ppor in 7 days so its a recent experience for me.
I paid for something called ratelock. $200 for two months before settlement.

I suspect you are boned. Read your paperwork.

She told me she did a special for me because I borrowed a large amount. There is no ratelock that other bank would have charge. This was stated very clearly in her email.
 
If the bank staff memebr has stated that they will lock it into until settlement at no fee then this is what you should get. I suspect the staff member has spoken out of turn and/or has little idea on what's going on. Staff like this give a bank a bad name which is a shame but you'll find there are a lot of inexperienced staff out there (this is coming from an ex-banker). Whether the staff member spoke out of turn is irrelivant, they act on behalf of the bank. If the property is PPOR you are governed by the UCCL, if IP you have no protection but I couldn't see any institution fighting you over this point.

I suggest you mention the the staff member's manager the email in question and make it quite clear that if the rate isn't upheald that you will be taking the matter to the Banking Industry Ombudsman. I'd suggest swift action will be taken. In case they decide to argue the point (mad if the content of your email is as you say) I'd suggest you contacting them 1st thing Monday.

This is why us MB's are out there. Hopefully most of us stop issues like this ever happening ;)

Regards
Steve


OH BTW let me know how you go as this interests me.
 
Hiya

Just as a matter of interest and to be able to provide more consructive feedback......what lender pls and what loan amount,..............and what was the period from loan approval to settlement please ?

ta
rolf
 
This was discussed in a similar post a little while ago...

Firstly I can see your point of view but at the same time a lender cant guarantee rates forever... to clarify where I'm heading

if you dont have a property, and you go to see the bank to discuss it, until you actually sign a contract (per se), then everyone has something to work with. Until then, rates would remain indicative as the bank wont be committing to something which they may or may not support.

If you had a property and signed up on say a 90 day or less settlement then you should have been able to rate lock the deal. And every major lender - i.e. nab, westpac, cba, anz, st. g etc... all offer this option.

It also might apply say on construction loans if they havent been drawn yet in some cases

So dont know if you fit into this.

Finding that rate in the current market is going to be TOUGH.

Ideally you should be able to use the concession and they should let you run it thru a MB who'd probably give you better service long time (as broker channels and retail channels should be same pricing).

Goood luck.
 
Thank you some really informative posts.

I will provide more detail once I got home. But this is essentially what happened. I have been in negotiation with the Bank of Queensland in Victoria prior to the Auction. I bought the property and have informed her so. The time of settlement was for 4 months. Through emails and phone conversations, I was reassured by her verbally and in writing that the rate she gave me is locked until the settlement. She was informed and aware of the settlement date in writing.

In the mean time, I have bought another property and this will settle in one month from now. She was informed about this a month ago and was happy to give me the same rate that she had locked in for me.

I received a call from her yesterday. She informed me that she is no longer able to give me that rate. The amount we are talking about is around 2 millions dollars loan - A large portion of this is fix and the rest is in LOC.
 
Last edited:
DK

usually your max term you can lock a rate is circa 90 days....so I'm figuring you'd fall out of this if it was 4 months

Comments... (not advice just comments)
1) watch the rate on the loc... that much aggregate borrowings you'd be expecting a pretty good discount on it..
2) think BoQs current fixeds are circa 8.49 today so 8.09 is a discount off their norm. You probably could still pull 8.15 or so.... if your loc is lower it might be better to look around
3) if youre doing part fixed and part loc hope youre not paying something like 8.5%++ on the line of credit... then you might be better to look around - depending how you set up the splits
4) x-coll.... x-coll....?
5) Boq's are usually franchised up here so I'd imagine there would be no different. Point being the franchisee probably isnt looking forward to running a loss on their business.
 
On early December, I email her this when she said she locked it in for me.

Me:
"When you said, you locked the fixed rate in at 7.89%, how long can this be locked in for. You obviously realised the settlement of the investment property is not until March 2008."

Her:
"For you, I will make sure I lock the the fixed rate in until settlement with NO extra cost which other bank normally charge (a fixed rate holding/lockin fees...)"

Now, I have rang the Branch Manager that is responsible for her. She argued that I have taken too long to decide upon the buyers name though the borrower's name is the same while I was deciding whether I should include this in my HDT. All along, I was under the impression that I have got time as she realised the settlement is in March 2008 for one of the property. She has never given me any other deadline. In fact we were working very closely to make this happen even last Wednesday as she informed me that we need to make this quick and I have make every effort to ask her when will I need to get this done by, but she could not give me a deadline. Her answer is always soon.

I have rang the banking ombudsman and they advised me to filed a written complaint. It will take at least one month to have the case started and perhaps a few more months until the case is finalised. Now, I am in a difficult situation as there is another property that will settle soon.
 
Ugachuka

Hi DK.

I've just finished working for NAB & previously CBA but am now a Mortgage Broker. To put things simple, it seems that she has offered you this Rate Lock to win the business & keep you from shopping around. If you really want to, you should look else where just to get the finance for the pending settlement. For what you are looking at ($2mil debt) I'm sure you will have no troubles with 1 of the major 4 giving you these interest rates or at least close enough to them. I would find it extremely difficult to offer any clients a rate lock for that period of time & at not cost to yourself. The fact that she knew all the details up front & still offered you this rate, means you have a strong case for the Trade Practices Act. Knowing that you have a pending settlement coming up, then I would look at a broker to do the leg work for you & even if they cannot match the rate, they should still be able to source you other options that should settle in time. The good thing about it, is that you don't have to go with the Broker in the end & stay with BOQ, but then look at a Broker to then source you others rates. Yes, there would early repayments fees etc, but you will enjoy the services of someone thats wants to help you as opposed to a bank that you will have no joy with, for the next 5 years.

Hope this helps.:)
 
DK - may i ask

When / at what stage did you go into or provide to the BoQ a privacy act, and the contract of sale and whatever info they needed to process the application.

And then how long did it take you to figure out to buy it in the HDT - a day or a month... if they are claiming you took too long, how long is too long.?
 
Hiya

Could be worse :)

We had a circumstance this week where we have an UNCONDITIONAL loan approval, so client exchanged contract on 47 000 ( 10 % deposit)

3 days later lender rescinds the approval and wont issue mortgage docs because they have decided to do a purchase val ( in hindsight) and the LVR is now 106.5 %

Part of the problem lies with the moronic valuer used, part is the current position of the lender.

Should be an interesting outcome ....................

As far as he client is concerned, they will be able to complete because alternative finance has been arranged..............but if they could not their 47 000 would be at risk.

The banks initial defence is that until mortgage docs are signed and accepted by both parties, there is no obligation to fund, and even there they feel they can legally weasle out ( since we have also had that)

ta
rolf

ta
rolf
 
Slightly unrelated, but on the theme of lenders and "it could be worse"...

I had the lenders twice threaten to call in my loan last year... The first time was when I discovered a problem with the property which showed up in searches but wasn't notified to me by my conveyancing solicitor (another story!). I went to the lender to request additional funds to cover necessary works to fix the situation as soon as I discovered it (about 6 weeks after settlement) and they said not only would they not give me the extra money, but that they were now concerned about the value of the security and were considering calling in my loan :eek:

I managed to get them not to do that, but then a couple of months later when the valuer inspected the same property to ensure that about $100K of construction works had been completed, to approve release of construction funding, we hit another problem. The valuer reported that all works had been completed, but that the property now seemed "more of a commercial nature than residential". Despite the lender having had all the floor plans at the outset, the lender advised that the property now seemed to be a commercial venture and that they don't fund commercial property, so they weren't releasing the construction payment and we needed to refinance the existing loans. :eek::eek:

It all ended up OK in the end, but suffice to say made a good enough story that you'll see our project profiled in the April edition of "Australian Property Investor", in the "My Property Nightmare" column...
 
Hi

As an add on to this
I was listening to some guy on the radio yesterday - dont know who but it was on 4bc - and he said (per se) that emails cannot be legally relied on and only faxes are legally binding.

Which might be why agents use faxes for contracts of sale, and builders for building - when they are doing progress payments etc - but they wont accept emails.

Dont know the actual legal background behind that logic but might be food for thought
 
Ok, I have got a call 30 minutes ago from BOQ. The manager had told me, after some high level talk, they are willing to reinstate the 7.89% fix interest only for 5 years. :mad: because it had causes unnecessary headache on my part but :) that it finally resolved.

Thank you everyone and especially to Bradsdad with some good suggestions.
 
Hi

As an add on to this
I was listening to some guy on the radio yesterday - dont know who but it was on 4bc - and he said (per se) that emails cannot be legally relied on and only faxes are legally binding.

Which might be why agents use faxes for contracts of sale, and builders for building - when they are doing progress payments etc - but they wont accept emails.

Dont know the actual legal background behind that logic but might be food for thought
Stupidity is at the forefront , not logic
Just as you can cut and paste an email so to can you do the same with a fax.
Where do you think cut and paste came from first?
 
Well done ... great outcome.

It proves that the squeaky door get's the oil.
It's also great to see the forum members being so free with helpful advice.

... and so close to Australia Day and all :)
 
Lukentel...re your message about email contracts and for everyones interest.

In Qld, the Property Agents and Motor Dealers Act 2000 (PAMDA) does most certainly provide for the emailing of contracts. I have done it on a couple of occasions to interstate and overseas buyers where fax is not an option.

I do prefer fax as it is instantaneous and generally more reliable, however email can be done.

The main points under the legislation are that both the buyer and seller must agree in writing prior to the exchange of documents that the electronic transfer is sufficient (is same for faxing) and there is a specific method of transmitting certain documents together and ensuring that they are received prior to transmitting the next docs and so on.

I would be interested to hear who it was that said otherwise on 4bc...documents sent in this method are also provided for under the Electronic Transactions (Queensland) Act in terms of keeping copies etc. I have my suspicions as there are a couple of people out there trying to change the way Qld operates in terms of contract preparation at the moment.

There are also opportunites under PAMDA to make corrections to errors in procedures if documents have been sent incorrectly.

hope this clears it up... have included the PAMDA section allowing email below...

cheers
UC:D


365 When parties are bound under a relevant contract
(1) The buyer and the seller under a relevant contract are bound
by the relevant contract when—

(a) for a relevant contract, other than a relevant contract
relating to a unit sale—the buyer or the buyer’s agent
receives the warning statement and the relevant contract
from the seller or the seller’s agent in a way mentioned
in subsection (2); or
s 365 286 s 365
Property Agents and Motor Dealers Act 2000
(b) for a relevant contract relating to a unit sale—the buyer
or the buyer’s agent receives the warning statement, the
information sheet and the relevant contract in a way
mentioned in subsection (2A).
Note—
See the Electronic Transactions (Queensland) Act 2001, section 11 for a
requirement about consent and section 24 for rules about when an
electronic communication is received.

(2) For a relevant contract...the ways are—
(a)...
(b) by electronic communication other than fax, if the
electronic communication contains—
(i) a message that includes a clear statement directing
the attention of the buyer or the buyer’s agent to
the warning statement and the relevant contract;
and
(ii) a single document, consisting only of the warning
statement and the relevant contract, that is
protected against unauthorised change, with the
warning statement appearing as the first or top
page of the document; and
Example of electronic communication—
• email


etc
 
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