HSBC Cheated On Me!!!!! Need Help!!!

[asdf]

I think you'll find a few of us with domestic loans might unknowingly be in the same position too. Irrespective of emails or verbals from RMs, the fine prints triggering a default will always get you.

Estoppel might hold up in a court of equity, but then again is there practically such a thing these days to solve your problems? By the time you take HSBC to court, you would've been better off paying the $150k. I'd try FICS then the Banking Ombudsman. It will drown them in paper work and hopefully get them off your back. But then the Aussie has tanked pretty heavily in the last couple of weeks, and yours will not be the only position on their books being called...

 

[boomtown]

I use Singaporean finance but exited all my positions in August when the AUD started to fall. Ill get back in when the AUD stabilises but in my view that could take a long time.

You need to think hard about what the AUD is going to do over the next few months. If you think it is going to continue to fall and you are not going to be able to make the margin calls you need to consider cutting your losses and exiting. It will sting like a ***** but it may be better than riding the freight train to hell.

Of course its your decision to make - but you would not have taken out a multicurrency loan unless you are capable of forming your own views on which way the AUD is going to move.

What does your finance contract say about margin calls? Does it say that HSBC can make a margin call? Have you read it? While you *may* have a cause of action against HSBC for misrepresentation or similar it is not a clear cut winner. What sort of dollar figures are we talking about here? Anything under say $50k just isnt worth fighting about in a court because you will chew through that in legal fees alone. How about a nice chat with your local banking ombudsman - today. I assume you are not in Australia or you would not have access to a multicurrency loan - which means that you probably have to go through the local system.

 

[boomtown]

Another interesting question is what is the proper tax characterisation of this loss (if you do make a loss).

If it is an expense that would come off your income tax - and would reduce the sting. A capital loss could still be carried forward.

 

[troyhunt]

The bank emailed me today and asked for additional security since the LVR is now 87% (instead of max 75%)

Has the vlaue of the property changed? I know the time period is short but this is a fundamental component of an LVR calculation. If you could demonstrate the value was higher it would bring the LVR down.

 

[kissfan]

So what would happen if the AUD all of a sudden increases in value (not likely at the moment)?

Hypothetical, but curious to know.

Regards
Marty

 

[Mr. Fabulous]

It sounds to me like you took verbal advice rather than reading the contract. Why didn't you read the contract?

Mark

 

[super_sam]

So what would happen if the AUD all of a sudden increases in value (not likely at the moment)?

Hypothetical, but curious to know.

Regards
Marty

Just guessing, but wouldnt it work in exactly the opposite way to whats happened here? LVR would drop at a corresponding rate to the dollar increasing. Then, I suppose you could refinance out of the FX loan into a regular loan at a lower LVR

 

[boomtown]

If the AUD went high enough you could theoretically pay off your mortgage.

 

[tubs]

But if the verbal clarification happened, then surely it would be binding none the less. The verbal clarification might have been to clarify what was written in the contract.

 

[Mr. Fabulous]

But if the verbal clarification happened, then surely it would be binding none the less. The verbal clarification might have been to clarify what was written in the contract.

- you have to prove the verbal clarification happened
- he signed the contract, therefore all that matters is what is in the contract

Mark

 

[boomtown]

It is possible to have a verbal amendment to a written contract. The tricky bit is proving it.

 

[redwing]

*ouch*


Nasty Lesson


Looks like the Aussie Buck may head lower for a bit longer

 

[redsquash]

What prediction do you have for the $H?
The Australian dollar will bounce around in my view but slowly become weaker. it seems to me you picked a real bad time to do FX investing, and your LVR will only get worse not better over time.
you may get another call in 5 months time......then what?

I bet you haven't read the fine print in your contract. Thats the kicker, not what some low paid middle manager has made up.


You may also be badly hit with higher 3 monthly repayments which I assume is your payment interval.


Maybe 8 years ago would have been excellent to do what you are doing now .
Of course if you can get a valuation on your house and if that is a lot higher then that may help you........unlikely

Verbal agreements are enforceable, but the problem is proving them. Your interpretation and the other party interpretation may not be the same , thus get it all in writing .
if they wont put it in writing then walk away.

With some luck the Aussie dollar will get stronger , but i suggest you switch asap.
Most FX mortgages have the ability to switch currencies.

Do you have this.
Lloyds TSB in hongkong maybe an option but again look at the fine print, but it seems superficially this product is not for you.
You need to refinance if that is possible
You need to know exactly what you are doing if you invest in currencies , rather than hope /expect wish or presume things will be in your favour,.

Whoever you speak to at the bank it must be at the state manager level or higher
I am sorry to here about your predicament

 

[GoAnna!]

Slightly off topic but in recent credit transactions I have been promised certain arrangements or told not to worry about a certain clause as it wouldn't apply in reality. In each situation I have asked for what they said in writing. In once instance they went back to the credit departmet who sadi "no way" ! It seems that the front sales people often have a far more liberal view of hwo things might work than the actual credt department who might trigger "margin" calls.

 

[Mr. Fabulous]

GoAnna,

That's because the sales people don't give a rats and will tell you whatever they think you want to hear in order to get you to sign. The complete lack of intelligence exhibited by most people ensures that this technique works quite well.

Mark

 

[jcjchung]

Update

I finally read the docs and it says the bank has the right to request for additional security within 5 days if the loan is above the approved LVR of the property.

The relationship manager was nice but vague about my situation. I was nice to him but annoyed. Apparently if the A$ drops, it will automatically trigger the bank system. The bank did not specify whether if any action will be taken if I ignore their requests for additional security. Its like a mexican standoff.

Meanwhile, Im getting myself prepared. Im very lucky to have a back up security with a property overseas in HK in HKD and ironically with HSBC HK. I can withdraw from that property and give it to HSBC Aus. The amazing part is HSBC HK's interest rate is 2.23% and HSBC Aus's is 3.5% which means I end up saving money at the end.

I got to say Ive been very lucky in this situation. But HSBC Aus really annoyed me. Instead of asking me for additional security, I think they should shut up and wait until the property prices go up. The banks request for additional security means they have no confidence in myself and the property (blue ribbon location with views)............Ive had previous mortgages with HSBC and its was completely paid off in 10 years.....im so annoyed!!!! Especially when they did not say anything about addition security when the loan is above LVR.

I hope my personal experience has highlighted the risks of taking out a foreign currency loan and I am very lucky to come out of this okay.

 

[Mr. Fabulous]

I got to say Ive been very lucky in this situation. But HSBC Aus really annoyed me. Instead of asking me for additional security, I think they should shut up and wait until the property prices go up.

So what you're sayng is that a business which you willingly entered into a contract with - without reading the contract, mind - should just 'shut up and wait for property prices to rise' instead of looking after their own interests and do the exact thing which is very clearly stipulated in the contract which you signed without reading?

Are you serious?

Mark

 

[Waverlybay]

JC Chung, i took out a similiar AUD/HK dollar forex loan with HSBC about 5 years and did not enjoy seeing the value of my property investment being tossed around by a fluctuating exchange rate. You are making two investments: (1) property investment and (2) a bet that the AUD will move higher than the aud/hk rate you settled at drawdown.

My concern is that the loan product you have taken is essentially a bet on the forex markets. HSBC are clever in marketing it as a lower interest rate product. HSBC are fully hedged and nicely protected at a 70%lvr so they will always do well out of the transaction.

My suggestion is that unless you know what you are doing in the forex market, then get the hell out of this product. Make the switch back to AUD and cop the capital loss. Handing over your HK security as a top up .. is only going to exacerbate your loss. Of course, if you like a good wager and see blue sky for the aud - then hang in. You'll make a capital gain on your loan (!).

WB

 

[Mr. Fabulous]

Waverlybay makes a good point. They didn't create this product for your benefit, they created it for theirs. They have an army of professionals who work on such deals all day every day. Do you think you can outsmart them? If you want to gamble, just go to the casino, at least then you can have a bit of fun losing your money.

Mark

 

[boomtown]

Uhhhhh

What happens to your HKG property mortgage when the AUD rises?

If its just the cross collateralising the HKG property to cover the AUD / HKG mortgage then no new forex exposure is created (although your total pool of security exposed to the forex risk has increased so your total risk profile is up).

But you said that you had taken out funds at the HKG domestic rate which indicates that you have actually taken out an additional mortgage over your HKG property and deposited that cash into an account meeting the margin call. Given that the base loan is denominated in HKG dollars I assume the margin call funds are in HKG dollars too (rather than AUD). Which doesn't create new forex risk (just greater exposure as noted above). If the AUD rises the security can be released.

Hrm seems to work - others can poke holes in the theory.