Offer of finance withdrawn - sign of further credit tightening?

Just wanted to chime in here to say that I'm also in an uneasy situation with a lender. Not as dire as Tracey's, but enough to make me shift a little uncomfortably in my chair.

Here's what's happening:

We are one step away from unconditional approval on our latest IP. The condition is that the bank wants a valuation of the property we are buying. The bank initially said that a "kerb side" valuation would be fine. Then they moved to wanting a full valuation. And now they are seriously dragging the chain on organising the valuation.

In the light of Tracey's situation, I am now also concerned that "unconditional" may not mean "unconditional". We have agreed to a four-week settlement on this property - so if the funds don't come through after exchange, we will have precious little time to find an alternative source.

Anyway - good luck everyone!

Cheers,
harriet
 
Harriet said:
Just wanted to chime in here to say that I'm also in an uneasy situation with a lender. Not as dire as Tracey's, but enough to make me shift a little uncomfortably in my chair.

Here's what's happening:

We are one step away from unconditional approval on our latest IP. The condition is that the bank wants a valuation of the property we are buying. The bank initially said that a "kerb side" valuation would be fine. Then they moved to wanting a full valuation. And now they are seriously dragging the chain on organising the valuation.

In the light of Tracey's situation, I am now also concerned that "unconditional" may not mean "unconditional". We have agreed to a four-week settlement on this property - so if the funds don't come through after exchange, we will have precious little time to find an alternative source.

Anyway - good luck everyone!

Cheers,
harriet
Click to expand...

Hi Harriet,

Which Bank have you organized finance with??

Regards Jason.
 
jingo said:
Hi Harriet,

Which Bank have you organized finance with??

Regards Jason.
Click to expand...

It's CBA, Jason.

We chose this lender on the advice of our mortgage broker. We are buying a studio apartment in Sydney, and we knew from the outset it might be tough to get finance for it. (It's just under 30 square metres.) Our broker made some calls to CBA, and they said they'd be willing to look at it. So on that basis, we went with CBA.

We have conditional approval, and have met all the conditions except their valuation. A I mentioned, they seem to be dragging the chain on the val. Anyway . . . we'll wait and see, I guess.

H.
 
Hiya Harriet

If u havent exchanged contracts you are still ok to jump out if the CBA says no.

I think u will find they are just sloooooooooow

ta
rolf
 
ozperp said:
Yes, I still have the document, but it doesn't have anywhere to sign. It is a letter outlining all the facilities, and includes a covering letter which says, inter alia, "We are delighted to advise that your application for finance ... has been approved, to refinance your existing facilities from ...". It also states that mortgage documents will be prepared within 5 working days.

I was thinking about it today and I tend to agree with you, Stuart, that even if my email could be construed as a new application or rejection of the terms, it should be irrelevant. Nowhere does it say "requesting modification of these facilities invalidates this approval"! :rolleyes:
Click to expand...

If your email was asking if something could be altered the they had the responsibility to reply stating that it wasn't possible. Unless you agreed to withdraw original application or requested to do so.

Excuse my French but 5 days is BS to reply to you. If they are serious they will have someone look at it and decide wether to honour it, refer to their risk team to decide or decline. This should take no more than 2 days. It's all a matter of prioritising your file. I personally would be giving them a deadline of 3 days max otherwise advise them the matter will be in the ombudsman's hands. The more time you give them the longer they will procrastinate and draw it out.
Glad Richard has a back up plan or 2. I would be advising BOQ that any costs incurred trying to seek an alternate funder whilst they decide will be claimed from them also. Might be worth mentioning that a prospective lender wants val fees upfront and you can only wait 2-3 days before you must act.

Looking forward to a positive result being posted real soon.


Regards
Steve
 
boomtown said:
Time to make contracts conditional on PROVISION of finance not finance approval.
Click to expand...

Agree 100%.

Rolf Latham said:
BOQ isnt alone in this sort of stuff
I have had 2of the big 4 come to settlement empty handed.............and declining to fund unconditional loans that have had docs even signed up.
Click to expand...

Wonder what the penalty for not completing was..... Need to create an escape clause that covers the possibility on the day of settlement - if there any problems with finance, then you get a get out of jail free card and walk away from the transaction without any penalties. Must speak to solicitor.
 
Last edited:
Rolf Latham said:
Hiya Harriet

If u havent exchanged contracts you are still ok to jump out if the CBA says no.

I think u will find they are just sloooooooooow

ta
rolf
Click to expand...

Hi Rolf,

Thanks for that.

I certainly wouldn't exchange until I had unconditional approval for the loan. My concern, though, is the possibility raised by Tracey's situation - i.e. that the bank (CBA) might bail even after granting unconditional approval. Goodness, that is a scary prospect!

I'm also a little concerned that the vendor will start jumping up and down about the valuation delays. However, if that happens, we'll simply remind her about the size of her studio. Just about any other financed buyer would need to jump through the same hoops.

Have a good day everyone.

Harriet
 
Harriet said:
I certainly wouldn't exchange until I had unconditional approval for the loan. My concern, though, is the possibility raised by Tracey's situation - i.e. that the bank (CBA) might bail even after granting unconditional approval. Goodness, that is a scary prospect!
Click to expand...
Yes, and I've heard of that happening for purchases, too! :eek:
 
hi all
this to me is a very interesting post
there are a couple of cases at the moment being run in both the high court and the equity court I think and they are on these very points
they are not on a letter of offer but an offer to fund and its very interesting how they are going and they are for some very big bickies.
there are a couple of funders that have not been able to fund.
these are coming to the pointed end of the rulings and will be very interesting to see how they go
the banks are putting up the material adverse effect arguement which is very interesting similar to a event that is beyond there control,and thats a very interest point in itself.
the other question is when is a contract binding on each party and what damages can be applied
if any
can you claim damage for a lender not giving you moeny to make a profit and would you have made a profit anyway
because you did not get finance and that in turn cost you to liquidate
whats the costs.
this is all the fun of the fair.
and a contract is a contract when two party's or more agree to do an event or thing .
it can be verbal( hard to prove) or contractual( bit easier)
and from my understanding and I could be wrong if you get a formal letter of offer and you meet all the requirements of that formal offer
the contract is when the offer was given.
and this is one reason that when accepting an offer you need to py the lenders establishment fees adn alos pay all the others fees up front(val etc)
why
because now its gone from a straight real estate deal to a commercial or business related deal adn you have paid a commercial amount and corporate law comes into play and thats when the fun starts.
so to say that a contract starts at signing a formal loan contract is not really true if you have been offered funding from a lender in a text(debateable at the moment but court are seeing text as a form acceptance) fax, email or letter of any form of acceptance to fund and you meet the requirements.
and then don't meet the requirement of that offer is in a bit of trouble.
oh and that also goes not only aust but across water as it a common law rule.
and also a contract does not need to be in written form to be a binding contract as a couple of footballers have found out( also texting does not at this stage form part of formal notification)
again this is just a laymans view of the legal system and don't use any thing in any form in legal entity on the rock of ours
 
grossreal said:
hi all
*snip
Click to expand...

Loan contracts have a variety of get out clauses for the lender but can generally be summarised as "material changes to the world of the funder" and "material changes to the world of the potential borrower".

We've all seen the examples of the former over the last year and expect to see more of the latter as funders use various review/monitoring mechanisms in the period between approval and settlement to do additional checks.

Monitoring changes to credit profile in said period could become all the rage in '09.
 
hi boomtown
sorry to say you are wrong.
contracts are some thing that you, me and everyone do every day of the week.
some people do a contract and not even know that they have done it.
contractual law is a very messy area and I have been thru it lots of times and is a very funny place to be as its not a easy place to move in as its a lot of he said that and she said that.I go to meeting with 5 people present because with 5 people you have a chance of 3 saying yes he said this and she said that
and yes thats a contract.
it does not need to be on any form of paper.
if a contract is said thats a contract as long as it can be proved that the contract was said.
as for you would have to be a *** wit to relay on a verbal to win.
sorry you are wrong.
because I personally have won on a verbal contract without a written contract in a court in nsw for 22k with 5 people present when the contract was agreed and the contract was up held that a verbal contract is a contract and if three or more are present when the contract is agreed that is a contract.
and not only that but when you are asked that you are being put on speaker on a mobile phone and they say you are on speaker with say 3 other people and you agree to do some thing and you don't you have agreed with a form of contract and if the person says you are talking with a and b and c and they are all talking you must be very carefull with what you are to or disagree to as this is a co hort and yes it is seen as a contract or could be if things go wrong.
thats the reason they always say I am putting you on loudspeaker and do you mind if you say no you don't thats fine but if an issue does arise its 3 against 1
and I will leave you to work out which wins.e
and Token Funder.
I am on the other side of the desk to funders
and funders are in a very sticky position at the moment.
they want to lend
but credit doesn't
they want to offer but
credit want to lend nothing
and the banks need to lend to keep up margins
so its hard rock and hard rock
for me I think let a few die and see credit change their tune.
or bring in a few new lenders that will lend.
half the managers I talk to would have not have a clue and the other half are looking over their shoulders
we have a decaying banking system made up of people that are there by default not because they are good but because the person above them jumped ship and they moved up without a clue of what they are doing.
we have people that think they understand finance because yesterday they were on a till
and we have guys above that understand whats happening but because of the red tape within the banks have no control on credit.and do you really think they also understand contractual law.
sorry but give me a break they would not understand the half the contracts they sign as a manager never mind email and letter contract law.
for me as you go up that elevator within a bank until you get to level 30 or 35 for get it they have simply not got a clue ad unless you are carrying a pass book they just do not understand.
oh and as a side line brokers if you refer a contract or offer to fund and you do that in your company letter head and do that because you have used the information supplied by a funder and that funder goes into liquidation I would have a look at your legal position.
just a thought
 
grossreal said:
hi boomtown
sorry to say you are wrong.
Click to expand...
As boomtown is a contract lawyer, that's a big call, grossreal! ;) I think we all know that if you have offer, acceptance, and consideration - you have a contract. And of course it can be verbal. boomtown's point, I believe, was that you'd be crazy to rely on a verbal contract.
grossreal said:
and funders are in a very sticky position at the moment.
they want to lend
but credit doesn't
Click to expand...
I sense the same thing, and I think that's what's happened in my case. Private Bank managed to sign off my loan without Credit's involvement, then a clerk intercepted my email when my private banker was on leave, and - naively trying to "help" - took it to ask Credit the question re I/O vs P&I. That gave Credit the opportunity to stick their nose in my file and squash the thing... :mad:

I get the sense that the only people that Credit want to lend to right now are the people who are cashed up and sitting on the sidelines watching; the very people who don't want to take out a loan right now. :rolleyes:

As you say, grossreal, since the lenders make their profit from lending, they could be in for some interesting times ahead.
 
grossreal said:
hi because I personally have won on a verbal contract without a written contract in a court in nsw for 22k with 5 people present when the contract was agreed and the contract was up held that a
Click to expand...

Maybe so - but if it was written down you probably would not have been in court in the first place. And avoiding court is generally a good idea.
 
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