What happens when your loan is sold to another institution?

[jerrybee]

I know this is quite rare and generally only happens during a financial crisis, and even then it's quite rare (I think?), but I'm curious what happens in this situation. Is the new financier able to change the terms of your existing contract?

I saw a documentary a while back about how all these farmers had their loans sold to one of the big banks who then begun enforcing stricter terms, which got me thinking...

 

[Terry_w]

Assignment of debt is pretty common. The terms of the contract will continue unless varied by the parties.

 

[Shahin_Afarin]

2 words - Wizard, RAMS

 

[Peter_Tersteeg]

Doesn't just happen during financial crisis. I can't remember the name right now, but a year or two ago a fairly large building society in Western Victoria collapsed. It's left a lot of people (both depositors and borrowers) seriously out of pocket.

 

[mflying]

Perpetual buys loan book from major 4 frequently!

 

[neK]

Perpetual buys loan book from major 4 frequently!

So are those customers who are part of the Big4 aware of they get moved?

 

[Gill Bates]

2 words - Wizard, RAMS

upvote that

RAMS > RHG

Rates went up
RHG also got into trouble (from ASIC I think) for exit fess above what it actually cost them....

http://somersoft.com/forums/showthread.php?t=46638
http://somersoft.com/forums/showthread.php?t=58220


Google RHG excessive exit fees

http://www.smh.com.au/money/borrowing/victory-on-exit-20120925-26hwx.html

http://consumeraction.org.au/media-release-rhg-mortgage-exit-fees-test-case-settles/

http://www.abc.net.au/news/2008-12-08/mortgage-holder-challenges-exit-fee-in-court/233424

 

[Rolf Latham]

HSBC ....................

ta
rolf

 

[DaveM]

I was with Wizard when they were sold to GE.. rates went up and they increased to match. Rates went down and they increased to match. At one stage I was on 8.5% post GFC.

So yes when your loan gets sold, you bend over and buy a woz sized barrel of lube. And refinance if you can.

 

[Ausprop]

Assignment of debt is pretty common. The terms of the contract will continue unless varied by the parties.

with mortgage contracts being quite unique in that the key variable i.e.interest rates, are not specified and are set unilaterally by the lender

 

[perthguy]

I was with Wizard when they were sold to GE.. rates went up and they increased to match. Rates went down and they increased to match. At one stage I was on 8.5% post GFC.

So yes when your loan gets sold, you bend over and buy a woz sized barrel of lube. And refinance if you can.

Yep. Mine went Wizard->Aussie->GE->Pepper. Rates varied but were high 8's and some over 9%

Total cost for the re-fi was almost 10k all up for under a million in loans. Looks like a few of us got burned.