Screwed by bank again even with 10% deposit

L

letiha

I recently was approved for a land and construction loan with Westpac, land settled in March got the bank the contract to finalise construction funds.

Spoke to the personal banker to confirm everything was ok with finance still before paying further deposit to builder, told all is ok, just slow getting paper work.

I got an email today saying that due to a change in lending Policy we no longer qualified for LMI and now had to do 80% lend !!!!!!!! that means coming up with an extra $50k. Starting to feel like what happened with bank west 2 years ago. This is despit a significat payrise in the last 2 months.

Feel totally screwed, I can't afford to continue renting and making land repayments, i could try and sell the block but i am going to make a huge loss even if i can sell the block for more than i got it fore.

What can I do, i even have emails from the personal banker telling me everything is ok and i'm approved for the full amount!!!
 
Sorry to hear that Wesuck have changed policy on you at the last minute.

Imagine having to deal with them day in and day out.

Then when you think you have a deal they will do they take 3 weeks to even open the file.
 
I would contact the bank. From my understanding of the recent policy changes with Westpac - they will still honour the application under the 'old' guidelines for up to 90 days.

Obtain your application number from the Personal Banker and call their Mortgage Centre in Adelaide to see what can be done for you.
 
I'm still working with my PB, this isn't our only loan with Westpac, we refinanced 1 of our loans to them at the end of last year with pre-approcal for another loan.

Went ahead 4 months later had to reapply they were all fine. They have an issue that my mum is on the loan but not on the title (we own the other properties togther) one of the suggestions is that i transfer 20% of the property into her name and they will include her income in the servicing, morons were happy to include her on the loan for the land but now not the constructions. This is despite a 25% increase in net income since the approval

*sigh*

My one hope is to run around like a twit to get proof of new salasry despite the letters not being officially done, HR is great and have said they will sort it out for me. Also we might have to cross colaterilise with the other proeprty which has some spare equity and chuck in a little more...pity Westpac doesn't do there own LMI anymore.
 
Leteha! am so sorry for these issues when are these banks going to start to work with us and not against, the letter of OK is ridiculas, and yet its not ok , i would be looking for heads to roll, for sure, Good luck with it :(
 
Hiya

WBC still do their own LMI, but have introduced some major limits etc .

However, where an AIP has been provided, they will usually honour that.

Not knowing the full circumstances its hard to comment, but its unusual for a lender to leave you sitting on a block you cant use............it makes a poor security .

I recall you own other property with your mum, as such there is derived benefit in her being on this loan and maybe not on the property.

Keep chasing, it will come good.


ta
rolf
 
letiha said:
I recently was approved for a land and construction loan with Westpac, land settled in March got the bank the contract to finalise construction funds.

Spoke to the personal banker to confirm everything was ok with finance still before paying further deposit to builder, told all is ok, just slow getting paper work.
I got an email today saying that due to a change in lending Policy we no longer qualified for LMI and now had to do 80% lend !!!!!!!! that means coming up with an extra $50k. Starting to feel like what happened with bank west 2 years ago. This is despit a significat payrise in the last 2 months.

Feel totally screwed, I can't afford to continue renting and making land repayments, i could try and sell the block but i am going to make a huge loss even if i can sell the block for more than i got it fore.

What can I do, i even have emails from the personal banker telling me everything is ok and i'm approved for the full amount!!!
Click to expand...

If these emails are recent, as I assume they are due to the 1st highlighted statement, then I would be arguing that you in fact have an approval in hand. Even if they have amended their servicing policy recently it doesn't give then cause to back down. I suspect your PB was talking out of turn saying your loan is approved but that's stiff biscuits as they are a representative of the bank.
If you have no joy after highlighting the emails you have then make mention that you will be sontacting the banking industry ombudsman to have the issue resolved. I doubt you will have any problems from there.


In a further post you make mention of your mother being on the loan but not the title. I'm actually suprised you have gotten as far as you have with the application as (unless there's something out of the ordinary not mentioned) I wouldn't have even submitted such an application. To be a borrower you must be recieving a financial benefit from the loan. In this case it appears your mother is not and as such shouldn't be used for servicing. Strange you PB didn't mention this at time of application.
MB.. The financial benefit rule will allow for a spouse to be added to a loan however.

Regards
Steve
 
letiha, I had a similar problem a few months ago, with a lender wanting to walk away after providing a written approval. Many brokers/bankers will tell you that the lender can withdraw from their commitment to give finance at any time they want, but my experience is that this isn't the case.

My bank (or at least their credit weenies) very much wanted to walk away and not provide the finance, but after I mentioned the Ombudsman and they consulted with their own legal department, they honoured the approval. I surmise that once they've issued an approval, absent any new information about your circumstances, they're bound to proceed with it. (Or at least sufficiently bound that they don't want to risk the bad publicity and/or litigation which may ensue if they don't proceed.)

Take it up with the bank's internal ombudsman. Let us know how you get on.
 
I was reading somewhere that G something or other (the largest writer of Mortgage Insurance in australia) is threatening not to pay out on some of its mortgage insurance contracts, because the underlying loan documentation was faulty (ie over statement of income etc).

Now we come to the crust of the issue, when times are good, every insurance company is happy to collect the premium, now in more uncertain times, we get to test the quality of these insurance contracts.

Now whilst this doesnt effect the individual property holder, it does effect the lending institution (as they rely on the pay out from the mortgage insurance contract).

Hence we might be seeing banks tightening their criteria on LMI.
 
This was within the last couple of weaks, i dont know if that means its new or old news. The point is the degree to which they play hardball. The harder they play, the less valuable mortgage insurance is as a hedging risk for the lending institutions, and the tougher will be future criteria.
 
Its still a big no, unless no LMI and i don't have 20% deposit. Will just have to transfer 20% of the property into my mum's name for the mortgage insurer to ok the loan, will cost about $800 in stamp duty and transfer fee's.....

Better than having to sell.
 
Talking about LMI ..... A couple of years ago we were purchasing an IP and in general conversation with our solicitor as we were signing documents, he was telling us that he used to work in the legal dept of one of the 4 major banks.

He said that if the bank considered a lender a fairly good risk then they would pocket the LMI fee/money from the lender and not take out the insurance. The monies collected went into a pool to fund the major staff functions at places like Darling Harbour in Sydney, where according to him no expense was spared and thousands of staff partied...... Good isn't it?

Martin
 
mystery said:
Talking about LMI ..... A couple of years ago we were purchasing an IP and in general conversation with our solicitor as we were signing documents, he was telling us that he used to work in the legal dept of one of the 4 major banks.

He said that if the bank considered a lender a fairly good risk then they would pocket the LMI fee/money from the lender and not take out the insurance. The monies collected went into a pool to fund the major staff functions at places like Darling Harbour in Sydney, where according to him no expense was spared and thousands of staff partied...... Good isn't it?

Martin
Click to expand...

If this was in fact true? i would like to see some jail time, for them:mad:
 
craigb said:
If this was in fact true? i would like to see some jail time, for them:mad:
Click to expand...

I am sure they would have themselves legaly covered or they wouldn't do it.

Ofcourse once the money passes over to them, it would be very tempting to keep it and as a business it would be their call if they wanted to self insure or to use an external insurer.
 
craigb said:
If this was in fact true? i would like to see some jail time, for them:mad:
Click to expand...
Why? You're buying the insurance to protect the lender, anyway - so the money's for their benefit, wherever it ultimately goes. I think it's fine for them to choose whether they want to purchase the insurance or self-insure; it's no skin off the borrower's nose.
 
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