Help! Can I get out of purchase contract- if it's bank's fault?

[plswprop]

I have an unconditional contract to purchase an investment property, with 5% deposit bond. I had Westpac approved the loan amount a few months ago (I've signed loan offer document). Settlement will take place in one or 2 weeks' time when building is completed.

I just had a call from my mortgage broker last week saying that Westpac had to reduce the loan amount by $40K (they had made an error in calculation- although they didn't admit it). Then this week, Westpac called again and said that amount had to be reduced further. They had to reduce a further $30K (total reduction from original loan offer amount $70K!!).

I have not paid any money as deposit but used a 5% deposit bond arranged by westpac. If I can't go ahead with the purchase, can I have any avenue of making Westpac be responsible for it? It would be very unfair for me because the staff at Westpac was at fault - ie taking wrong figs to calculate my eligibility, not once, but TWICE !!!

If anyone can help with the legal side of this situation, or refer me to some avenue, I'll be most grateful. Thanks very much.

 

[asy]

Hiya Pls

I can't see how you could possibly get out of this purchase, since the bank is not party to the contract. (Assuming, as you said, the contract is unconditional). The contract is between you and the Vendor, and the Vendor is not at fault (ie: unable to settle).

I would imagine that you would have to approach your solicitor to see if you can enforce the original loan offer docs.

If that's no joy, see if you can find another bank or broker to help you out.

Sorry It's not good news from my perspective...

but I hope it helps,

asy

 

[Aceyducey]

Pls,

Firstly - banks never acknowledge fault without lots of pressure put on them.

Secondly they have the resources to keep you tied up in a court case for years.

Firstly, check that the contract has gone unconditional. If it is still conditional on finance, you may wish to pull out now.

If you can't get out (or if you can and still wish to try to make it fly) speak to a good mortgage broker, explain the situation & see if thy have any suggestions...Rolf Latham & Simon Mack are both regular forumites and you can find their details from their signatures.

Next pursue with the bank...do you have a friendly loan officer there? Find one! Explain & see what they can do...be prepared to spend several days on the phone climbing the ladder.

If you get nowhere here, you may need to speak to the vendor & tell them of the issue and that you cannot complete per the contract on time. While they may be angry and try to hold you to it, remember that a contract is an agreement between two entities and if both entities agree not to enforce the contract it is void...you may also be able to advise them that sure they can get angry, take you to court, whatever - but if they need the money themselves to move on another property or in another area, there is no way they can get it from you quickly - not your fault...bank mistake.

If they are sympathetic you may be able to either get out of the contract, lengthen the settlement to give you time to resolve matters OR even introduce a level of vendor finance where the vendor retains a portion of equity in the property for an agreed period of time (six months, a year, whatever is mutually acceptable).

Finally, you may be able to sue the bank for negligence if you can prove it was their error that caused this mess. The aim would be to have them pay all your costs - time, interest, penalties, court costs....this is a VERY tough route as they can tie you up in the court system.....but if impressed on them that you are willing to go talk to ACA or 60 minutes about the situation & demonstrate their failure you may get quicker results.

Cheers,

Aceyducey

 

[Rolf Latham]

Hiya

Much depends on why the want to reduce the loan amount BUT if you were my client I would not even have brought that crappy answer to you without first going to tackel the lender.

I would have gone to my legal representative to write a "nice" letter that uncondtional finance approval means exactly that.

If you have been upfront with your app and there have been no wishy washy contract stuff then although they do have a legal position their moral one is very poor.

If you stick to your guns you will be succesful

ta

rolf

 

[plswprop]

Thanks everyone for your input. I wish I had known a better mortgage broker too.

Seems like my broker had been weak- always being pushed around by her banking contacts and me always had to wait for so long before they get back to us. Wish someone had recommended you(Rolf) to me before.

Is it true that each broker is allocated a certain contact in the bank and the broker can't change their contact person?

I just cannot believe how incompetent the Wespac staff that access my loan, having taken wrong figs to calculate, then stuffing up TWICE!!

 

[Les]

G'day plswprop,

Following your comment:-Wish someone had recommended you(Rolf) to me before I hope you have PM'ed Rolf, or otherwise utilised his experience.

Please say you have.....

Regards,

 

[Rolf Latham]

Hi PLSWRP

Yep, you get allocated to a certain person in the food chain, But rarely should that stop the broker from doing what needs to get done.

Mostly you can get satisfaction - especially in an instance like that where the lender has made an obvious error. The major lenders are generally very reasonable when you can show them the error of their ways, and we have been succesful in recovering delay costs and penalty interest

Sometimes, in times of peak processing times No ONE south of the MD can get anything done.

Realistically, your job as a broker stops when the bank says boo, BUT they get us to sign aggreements to state that we are NOT agents of the lender so this then suggests we work for the client, soooooo........

Thanks for the kind words Les, but I dont think that what I offer is any different to anyone else, I make errors too (often wrong but never in doubt for sure ). The only point of difference that I know of is that I take the lender's performance toward my clients personally.

My advice is to bypass ALL processing people, lodge a complaint with Westpac directly AND get onto the banking Ombudsman.

Clearly, you have the moral/ethical (and in my non learned opinion the legal) highground here.

Ta

Rolf

 

[Les]

G'day Rolf,

I dont think that what I offer is any different to anyone else, I make errors too

Maybe so, but you would (I'm sure!!) work your butt off to put things right, too, if that were to happen.

The only point of difference that I know of is that I take the lender's performance toward my clients personally

Yeah, and that can make a HUGE difference to a client, especially one who is just starting out....

The only reason I mentioned you, though, Rolf, was to encourage plsw... to actually "make contact" with you. As I know you could have pointed him/her in the right direction in about 5 mins. I didn't know whether the "wish..." (as posted) was merely that, or whether they were still TRYING to put things right.

Anyway, you have made direct contact here, so I'll step back and leave you to do what you do best.

Regards,

 

[plswprop]

At the moment, my reduced loan amount is still not yet unconditional!! It's supposed to still go back to credit dept and will take about 3 days!

If I go to Banking Ombudsman, will Westpac then purposely delay-put on hold everything and have problem in settlement? or I might get Westpac to give me the original approved amount?

I just don't want too much hassle and legal costs etc..

Is it possible for me to give you a quick call Rolf?

 

[Rolf Latham]

sure

0414 788 229

Ta

rolf