Defaulting repayments - need advice

S

sue78

I have a property that was due for settlement on monday. There's a surplus of $140k. In the past 2 mths I have defaulted repayments because I decided not to renew the leases and put them on the market instead. I knew they would sell quickly and cashflow is tight (no rent) so I thought it would be ok to default for a few mths.

I tried to explaining this to westpac but they didn't care since the loans were not in collection but when they became in the red, they would hounding me weekly.

Now today, arranging settlement with the settlement team, it seems the surplus funds will not be released to me because of the default. They have recently changed laws and take default really seriously. Basically, it doesn't matter if the loans is paid out and all defaults paid off. The surplus will go into my other loan accounts to decrease the LVR.

My LVR is already at about 75% without recent valuations.

But it doesn't matter as it's up to credits discretion to do what they want. Basically they may paint the scenario; I am selling 2 houses at once, not made repayments for 2 mths for 2 properties, what am i planning to do with surplus funds? etc

They even want to know what I want to do with my money? why not pay off the other loans?

It just doesn't make sense. I have 8 yrs history with westpac and never defaulted ever.

is it just scare tactics.

i'm planning to pay 90% of the interest today $6k but it's still going to credit.
 
So you cross-collateralised, stopped making payments (did you ask them or just stop) and are surprised that you are considered to be a higher risk. What's your credit report like now?

You're two months late, you're stuffing up your banker's bonuses, and you want a gold star.

In the times when for employers etc I've needed to stretch the friendship with bankers, you work with them, you find out what their red flags are and you try to help them have a quiet life too.

I assume your loans are now with a different part of the bank than they were before so any goodwill you had with past bankers is non existent.
 
Oh....
Not a good thing to do, as you have found out the hard way.
It's good you are sharing this lesson, and hopefully others will learn from it.
 
Just a note - you may wish to check on your rates as instead of paying your 6.xx% you're now paying default interest on top. it might be around 8.xx% (i.e. a margin of 2% or something)

Probably the way to approach it if I'm reading it right is if theres 3 loans, 2 IPs and 1 PPR/Other and the 1 is still clear with no arrears then you might be able to refi the 1 PPR/Other loan. Otherwise...
 
sue78 what were you thinking? a lesson for all to take their debt obligations seriously. hope it works out for you eventually.
 
I did call up mortgage centre when we decided to sell rather than re-lease our house. But they said my accounts were all good :confused:

So then I thought I better speak to someone and spoke to a branch manager who got me in touch with guess who? mortgage centre again. I explained the situation and they said again, they can't do anything until I actually go into arrears.

Ok, once in arrears I told them the reason is 'hardship' which should be quite common right? and how i am going to pay the arrears etc so I don't know why they are throwing all this at me now. I have spoken to a few banker friends and it seems I do rights to make a complaint to the ombudsman. I was also told many time by collections that the arrears will be paid at settlement when the loans are paid out in full.

spectre - extra 2% interest is ok since we really are quite tight with funds atm. I have $140k surplus at settlement. Another house on the market with about the same amount of surplus. My other loans are all fine.

It's ridiculous because I have a reason for going into arrears and i have funds to pay it back and I tried many times to convey this to them. I should not have a bad credit rating and they should not be thinking I'm about to go bankrupt and treating me like this..I'm just so annoyed.

I think I will be changing lenders.

I hate this property business. I haven't been on SS for a long time. Still doing well with building and still active but I am sick of IPs, tenants, banks.

I got caught out big time...must be the baby brain. I under borrowed for construction (not over budget) and could not refinance because we r on one income atm coz I quit my job. So we had to raid the kitty fund to finish off the building.

Funny how I can be in such a predicament and if everything works out, by next week I will be fine and dandy.

Good news is that my new build got an excellent valuation today. More than 20% but I don't know...I'm just stuffed.
 
If I may, what were you thinking???

Seriously? You haven't paid your bills and you expect the banks to hum along as always?

I don't get your thinking behind this?

I agree with jrc and the gold star theory.

I don't understand how you don't get it and why you feel you are the victim here?

It's like people playing the poor me game but with all the bells and whistles in their home and the best car they could get a loan for, but not paying their rent and complaining they're getting kicked out, whilst i'm standing there wearing the cheapest clothes I can find and living within my means, so I always have a roof over my head!
 
this was yesterday, and today you need to move onward.

Moving to another lender should not present a problem as long as

1. Your CRAA file hasnt been tagged ..........unlikley, but check at www.mycreditfile.com.au

2. The properties that you have sold, have extinguishged the loans that have been in arrears.

I have to say, this isnt a new thing, and has little to do with any legislation. Retention of surplus funds has always been at the discretion of the lender........more so if you are crossed, its just been a more common thing in the last 3 years

ta
rolf
 
If a lender wants to keep more of the sale proceeds than the actual loan tied to the property being sold, do they usually reduce the facility/ies. We will be selling an IP and want to reduce loans but expect we may be asked for more than the cost base associated with the IP. If so, no real concern but I would like to keep the limits in place for future use. This is westpac and the loan for the IP is a larger loan which was an amalgamation of two loans from a previous lender. Cost base for the IP to be sold is $100K and this is the amount we want to repay to keep the loan "clean" re deductibility but we suspect the bank might keep all proceeds.

We will know soon enough but thought there might be a general policy... Or does it come down to a "case by case" basis?
 
marg4000 said:
You will probably find other lenders will be even more wary with defaults on your credit record.
Marg
Click to expand...

I will definitely be fighting that.

I actually do have the right to complain. It's the same as cannot afford to pay electricity bill. They want you to let them know and set up a payment plan and they want to know how and when you will pay them. I tried to do that with Westpac but they did not record it or take it into account. I don't understand why though.

I think last year, I had defaults because a loan had come off a fixed term and the direct debit stopped. I was so busy, i didn't even check our accounts or letters from westpac since we get loads of statements. It took them ages to call me and made me aware and I fixed it up immediately. But I have borrowed since and no bad credit rating.

I was also told that by collections that I can pay back default at settlement. This is even before I defaulted and they told me many times, even today when I spoke to them to get the correct figure.

my personal banker has been away. I only found out all this mess today and told her about it. Yes, it was partly my fault but I did speak to various people at westpac to try to sort something out.

My banker friend said that if westpac had done the right thing then it definitely would not impact my credit rating. He's a business banker and this is so common..some clients hit a bad patch with overseas investments and it's common for them to default for 2 to 3 mths and make payments where possible...as long as the banker knows and credit knows about it.

skater ---sorry but i don't think it's anything like your analogy.

if it affects my credit i will definitely take it up with ombudsman, clear my name and take my business elsewhere. I have only ever used westpac for all my borrowings. last time i checked i am still their customer.

banks do have a duty to customer service. if they start exercising all these rights under the new law, well they will lose a lot of customers.

i am not a thief, i did not never plan to pay them back. I'm so upset that I can just give up this stupid game all together, even sell up everything and have no loans...no stress.

funny thing is that i was a relationship manager in my previous life. i know how the banks work.

what i have been told is that credit have the right to take all surplus from me to reduce the loans...that means regardless of LVR. Even a 20% LVR. I think that's a very scary new law.

also, my bank manager cannot make a case for me because this is diff to lending/borrowing. It's credit for default and the settlements officer is dealing with the credit officer. Both who do have a clue about my portfolio. My bank manager says anything can happen...just have to wait and see. It's just how they want to interpret the situation.

Honestly, if the bank/collections had not said I could just pay it at settlement, ...I would have done anything to meet the payments and avoid all this hassle. I have friends and family hat can help out for a bridging loan. It's not a lot of money that would make it hard for me to borrow from them.

That's why I was so shocked today. Just felt really dumb. I offered to give them the sale advert, kept them informed with the progress of the sale (had lots of offers and contracts and only dragged out to 2 mths because contracts kept falling through.) and even offered to send them a contract etc Now collections turns around and says that they don't have a copy of the contract.

another lesson learnt..just deal with 1 person so you can hold just 1 person accountable if there's a problem. only deal with your banker.
 
hi wylie..how r you?

rolf, thanks. i know that. the problem is that in a normal situation there would be no retention because they have more than 20%. It's because of the default, they have and are more commonly now exercising their discretion.

But do you think I have a case with the ombudsman? i mean if my credit isn't affected then I don't care. But still I feel like my head is about to explode.

wylie..i don't know. but my bank manager advice me to delay settlement, pay all default and hope for a good out come from credit. Otherwise if I settle on monday, they retain all funds then I will need to apply for refinance! and it may be more difficult to do.

I also paid to have valuations done today so surely above 40% is enough for them? what's scary is my bank manager said it's not even about the lvr.
 
Did they not provide you with customer service when you were paying your bills?

Obviously you were happy with them and that's why you kept going back.

It's simple dimple, you were in the wrong, suck it up and move on. You have no right to be fighting anyone, you've done the wrong thing, face it!

Oh no, sorry what I really mean is:

I know banks are ridiculous, it's so unfair, I feel so sorry for you that the bank turned nasty when you didn't pay the money you owed :rolleyes:
 
Hi Sue, I feel for you if things have happened as you say. I banked with Wes from 0-24 age and had really bad service at one point too. I left them as soon as I could. I spoke to someone higher than my bank manager, and spoke to the ombudsmen. At the end of the day, although I was given incorrect advice from Wes employees, it was me who had agreed to certain things in writing which made me at fault, which I feel you may also fall into the same category. It's worth calling the ombudsmen, just to get some clarity. I also found some Wes employees were willing to give hints along the way which may help you to be better off. Speak to different managers at different branches. I'm not sure if it will help in your case, but it wouldn't hurt to ask. I have dealt with some smaller banks who are more helpful, give customer service. I can give you the name of someone in a smaller bank who may be able to help you. I understand your hurt and anger! Been there!!
 
lil skater - it's not that i didn't want to pay them but i didn't have the funds to. why do u need to be sarcastic though?

if they play dirty and retain funds then i've really had it with this business. my ip's all all below 80% and my ppor is below 40%. without cashflow i can't operate anyway.

rolf, will it make a diff to credit that i defaulted on 2 loans and not all. If i was going bankrupt i would have defaulted on all loans.

also, defaulting on loans is so common...doesn't anybody go through difficult cashflow times on SS? what do you do? what am i suppose to do next time? lets hope not! my friends said i did the right thing informing the bank. some ppl don't even bother and just run off. the bank is suppose to work with me to bring the account to date.
 
Once i put the correct amt into an acct that was going to get drawn on for our monthly loan repayments. My husband withdrew some money and one of the loans wasn't paid. I didn't realise until we applied for another loan with them and it came up as a default. i had to write a letter to explain what happened to keep it on my file.
 
Westpac

Hi Sue,

I can understand your frustrations. I have my three loans with Westpac - only because a couple of years ago they offered 85% LVR without mortgage insurance. But they have been very difficult to deal with.
Every time we call the "Mortgage Centre" they make us talk to a different person who has to look up our history on the computer and they have no idea how to deal with more complicated matters than telling us the current interest rates.

We have threatened to leave Westpac several times, and they immediately transferred us to the "customer retention centre" where they proudly told us that our variable loans would cost $3,500 to discharge, as we have only had them for two years.

I encourage you to put this behind you, keep your faith in investment properties, and change lenders ASAP!!! I will be dealing with Members Equity Bank for my next investment.

I wish you well.

Mike
 
It never ceases to amaze me that people have any sense of loyalty to a particular bank.
It is very rarely reciprocated to any significant degree.

Banks are a business and you represent less than 0.01% of their income
You can't expect them to care why you aren't paying your loan.
You can't expect them to care how long you've banked with them.
You can't expect them to care that you are getting out of property investing.

The sooner people realise that bank loyalty is a one way street the better.

As much as possible, keep your loans with separate banks.
If you think your a good customer, ask the bank for a discharge figure. You might be shocked at how little they care about you leaving them.

Dan
 

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