Opps...The Bank "lent" us an extra $250,000

[Brinkdude]

Our Bank has kindly lent us an extra $250,000.

I mean, $250,000 more than they approved, $250,000 more than the mortgage documents, $250,000 more than the valuation and security with an LVR of 188%.

I didn't think the deal was that complicated.

It involved 2 new loans with this bank, two revalues and draw downs of existing loans and 5 valuations across three states. The 5 valuations all went to plan, the 2 new loans on the new properties went to plan however the 2 draw downs went astray.

The Bank approved a total of $500,000 on the 2 revalues (80% LVR) and once you take away the existing morgages this left a redraw of $56,000. What they did however was apply the $500,000 against only one of the properties and then deposited the balance as suplus into our account (i.e $306,000). So on one property I have morgage of $250,000 (Bank Val $360,000) and on the other, a mortgage of $500,000 (Bank val $265,000).

I've currently parked the extra money against another property we have with this Bank so that I am not paying interest on it and pondering what to do.....

 

[BV]

Are you saying that you didn't ask for this to happen?

I hope that you have parked them into an offset account
and haven't put them straight into the loan.

Acessing your equity is not a bad thing but are you planning to buy
more investment properties?
cheers

 

[Brinkdude]

Hi BV

"Are you saying that you didn't ask for this to happen?"

Correct.

"I hope that you have parked them into an offset account
and haven't put them straight into the loan."

Yes, in an offset account.

"Acessing your equity is not a bad thing but are you planning to buy
more investment properties?"

Always.

 

[LynnH]

Brinkdude

Which bank - please???? OMG - would love a bank like that!!! Let me at it - I feel a buying spree coming on!!!

LynnH

 

[BV]

Brinkdude,

They must have told you about the revaluations
because there would have been costs involved.

Surely they would have explained it all to you.
Maybe the process and the reasons behind it didn't click at the time.

Also, you would have had to pay stamp duty on the extra borrowings.

cheers

 

[geoffw]

Be careful.. Take advantage while you can, but be careful of any consequences, just in case.

 

[Brinkdude]

Thanks Geoff, message understood.

I don't intend to spend it. It will just sit there against a (now) Unencumbered property.

BV

The valuations were all in line with market expectations, the Bank just got the execution wrong and applied the total amount of approved borrowings to one property instead of the 2 Xcoll props. No additional stamp duty paid.

Lynn

..........Now that would be telling..........

I'm sure it will all balance out in the end. There will come a time in the future when I will want to use these properties to fund other acquisitions and all Loans & valuations will come into calculation.

 

[LynnH]

Hi all

geoffw is correct, as usual - 'tis wise to be very cautious! My comment arose more out of frustration - have just been through a 'valuation problem' with our bank. In the end our POV prevailed, but it curtailed our IP purchases for several months - most frustrating!

Cheers
LynnH

 

[ggumpshots]

Most banks have the right to recall the loan at any time , don't they?

In practise this doesn't happen , but if I was an auditor I know exactly what my next step would be after firing the clerk responsible.

 

[jingo]

Bank error in your favour - Collect $250,000 and buy more properties!!

 

[Kristine..]

Our Bank has kindly lent us an extra $250,000.

I mean, $250,000 more than they approved, $250,000 more than the mortgage documents, $250,000 more than the valuation and security with an LVR of 188%.
QUOTE]

Now that you are aware of this mistake you are honour bound to notify the bank immediately and make arrangements to repay the money.

Keeping it amounts to fraud. Yes, it was their mistake but you know that it was a mistake and the ramifications against you could be severe.

Don't be tempted to just smirk and say it's their problem. It's now your problem and you should correct the situation as soon as you can.

Honesty cuts both ways. Show your honesty by drawing their attention to the situation and doing the right thing immediately.

Regards

Kristine

 

[sailor]

Kristine is right. But tis a lovely (if not transient) fantasy to think the bank would not find out, and when they did, would be happy you did not fess up.

 

[Spectre]

Talk about a reverse mortgage....

 

[kissfan]

Hi Brinkdude.

Regardless of what you do with this money, it is not free. You still have the repayments on it.

You said you are leaving it to sit in an offset account and now have no interest on the said loan, but you now have the interest to pay on the $250K.

Unless that is what you want, I would be notifying the bank involved.

Regards
Marty

 

[Jase H]

Our Bank has kindly lent us an extra $250,000.

I mean, $250,000 more than they approved, $250,000 more than the mortgage documents, $250,000 more than the valuation and security with an LVR of 188%.
QUOTE]

Now that you are aware of this mistake you are honour bound to notify the bank immediately and make arrangements to repay the money.

Keeping it amounts to fraud. Yes, it was their mistake but you know that it was a mistake and the ramifications against you could be severe.

Don't be tempted to just smirk and say it's their problem. It's now your problem and you should correct the situation as soon as you can.

Honesty cuts both ways. Show your honesty by drawing their attention to the situation and doing the right thing immediately.

Regards

Kristine

Kristine & Sailor are right (unfortunately)

There is a legal concept 'Theft by Finding' which would likely cover this situation. It is exactly the same as if you saw someone drop their wallet and you picked it up and kept it. Basically you are required to make 'resonable' attempts to locate the owner of the property and return it.

If on the other hand you found a 'fifty bucks' on the ground and no one around (ie didn't see who dropped it etc) you would be quite entitled to keep as there is no reasonable prospetc of finding owner of property.

In the current case it is quite obvious who the property belongs to.

As a long term bank stock shareholder it annoys me to hear about these stupid bank blunders which continually get made.


Jase

 

[Brinkdude]

As I have said I'm still pondering the issues and thought the forum would able to offer some constructive advice or share their experience.

One thing I am certain is that it is not Fraud as some suggest. That would imply that I deliberately deceived the bank in order to obtain a financial advantage and this is simple not the case.

The bank has made a mistake and they still hold enough security to cover their position amongst these properties and 4 other titles they hold.

It's not as if it's free money. I didn't actually plan on having to come up with an additional $1,450 per month for the additional mortgage payments hence the reason why I transferred the money back to the bank on the day they made the error albeit against another loan.

 

[jingo]

As I have said I'm still pondering the issues and thought the forum would able to offer some constructive advice or share their experience.

One thing I am certain is that it is not Fraud as some suggest. That would imply that I deliberately deceived the bank in order to obtain a financial advantage and this is simple not the case.

The bank has made a mistake and they still hold enough security to cover their position amongst these properties and 4 other titles they hold.

It's not as if it's free money. I didn't actually plan on having to come up with an additional $1,450 per month for the additional mortgage payments hence the reason why I transferred the money back to the bank on the day they made the error albeit against another loan.

Hi Brinkdude,

We have had the bank make errors with our accounts as well. Usually to do with loan repayments being incorrectly calculated (not in our favour I might add).

We did have an interesting experience once though. There was an extra $1500 in one of our accounts. I went through our books a number of times and was convined it wasn't our money. (ie, not a rental payment, dividend etc). We contacted the bank and told them. They went through the transaction history and insisted it was actually our money even though we knew it wasn't.

Well, I had, in my opinion done the right thing, and if they insisted - so be it!!!

Maybe this could work out the same way for you Brinkdude - (Albeit with a lot more money - half your luck is what I say! )

 

[buzzlightyear]

Hi Brinkdude,

We have had the bank make errors with our accounts as well. Usually to do with loan repayments being incorrectly calculated (not in our favour I might add).

We did have an interesting experience once though. There was an extra $1500 in one of our accounts. I went through our books a number of times and was convined it wasn't our money. (ie, not a rental payment, dividend etc). We contacted the bank and told them. They went through the transaction history and insisted it was actually our money even though we knew it wasn't.

Well, I had, in my opinion done the right thing, and if they insisted - so be it!!!

Maybe this could work out the same way for you Brinkdude - (Albeit with a lot more money - half your luck is what I say! )

The exact same thing happened to me a couple of years ago, but the amount was ~$200.

Brinkdude, two things come to mind

a. As Sgt. Schultz says, I know nuthink!
b. Shhhhhh!!

 

[Les]

G'day BD,

One thing I am certain is that it is not Fraud as some suggest. That would imply that I deliberately deceived the bank in order to obtain a financial advantage and this is simple not the case.

I think we all realise that you did not set out to deceive the bank. As such, no, not fraud. But, now knowing they have made a mistake, why would you not inform them of such? If you carefully read your mortgage documents, I'm sure they will have a clause within it along the lines of "you will make them aware of any circumstances that the Bank should be made aware of" - or words to that effect.

So, no, I don't believe you have fraudently deceived the bank. But if you don't make them aware of their error, then - hmmmm - well, maybe you have... A sin by omission rather than commission perhaps.

Regards,

 

[Peter_Tersteeg]

Regardless of the legality of saying nothing and keeping the money, I wouldn't want to annoy a lender to the tune of $250k. If they found a $200 error they might write it off. If you tried to hide $250k, they have ways of coming down on you which don't require legal action.

I'd hate to see a $250k default on your CRAA. It would be a loooong time before you borrowed any money again and some of your existing loans might be called if it was discovered.