Banks cannot force homes to be sold for circumstances outside of the
home owners control then ..........
FRAUD ON THE LAF
BANK APPROVAL OF AN unaffordable loan
INCORRECT PROPERTY DATA - crooked Valuations bank is responsible
Deceptive Income Fudging by Bank engineered secret calculators
Surely, all would fit the bill.... ??
"All outside the Borrowers Control."
National Consumer Credit Protection Act 2009 and Uniform Consumer Credit Code.
Australian lenders are not permitted to call in regulated loans, 'margin call' borrowers, or repossess homes just because house prices fall.
http://australianpropertyforum.com/blog/entry/3174279/161866/
Property bears often claim banks will call in loans, 'margin call' borrowers, or repossess homes if house prices crash and borrowers have negative equity.
They say banks can do this even when the borrower is keeping up with repayments.
In reality, Australia's consumer protection laws prevent this. The Consumer Credit Code says consumers
are not liable for things ordinarily outside their control and can't be held to obligations that could only be
met by selling their home.
The 2009 NCCP Act (and the earlier UCCC) includes clauses designed to prevent lenders from behaving unjustly or creating contractual obligations that could only be met by selling the borrower's home. All owner-occupier loans are regulated and all investment property loans entered into since July 2010 are regulated, with the exception of property developer loans (loans for multiple properties valued at more than $5 million).
The NCCP Act contains clauses like this... Prohibition on suggesting or assisting consumers to enter, or increase the credit limit under, unsuitable credit contracts.
'The contract will be unsuitable for the consumer if, at the time of the assessment, it is likely that the consumer will be unable to comply with the consumer’s financial obligations under the contract, or could only comply with substantial hardship' 'If the consumer could only comply with the consumer’s financial obligations under the contract by selling the consumer’s principal place of residence, the consumer could only comply with those obligations with substantial hardship'
In other words, credit contracts must not contain provisions that could only be met by selling the home. A provision that let the bank call in the loan any time they want, any time house prices fall, or any time they're not satisfied with the property value, would be a provision that could only be met by selling the home.
Therefore it would be a clear breach of the regulations, which is why regulated home loans don't
contain any such provision.
Furthermore, ASIC has identified unfair contract terms as 'Terms that make the consumer liable for things that would ordinarily be outside of their control.'
As a result of the Code, Australian banks exclude certain terms and conditions from the regulated sections of their home loan contracts. They apply different terms to regulated versus unregulated loans, as can be seen from the sections below scanned from the standard T&Cs of a Westpac contract...
Westpac "Further Security" clause
Westpac "Accelerated Payment: Default" clause
And the links below show that ANZ contracts also differentiate between terms that apply to regulated vs unregulated loans. The standard ANZ contract includes 'material adverse change affecting the property' as a default for unregulated loans, but excludes it for regulated loans...
ANZ Contract Page 1
ANZ Contract Page 2
ANZ Contract Page 3
Some banks, including CBA and ANZ, publish general information booklets that include default events such as the bank being unsatisfied with the security value. For example, the ANZ information booklet says this...
'10. ANZ’s rights if there is a default under this agreement
Lending for personal use or investment in residential property, regulated by the National Credit Code, or lending for personal investment purposes (other than investment in residential property)
An event of default occurs:
• if, in ANZ’s opinion, any event or circumstance arises causing a material adverse change in your financial situation likely to affect your ability to meet your obligations under this loan or facility or any security for it.
A material adverse change includes, but is not limited to:
• any reduction in the value of property mortgaged to ANZ as security for this loan or facility'
However these information booklets are not, by themselves, legal documents. The information booklets cover a range of financial products, both regulated and unregulated, including non-property related loans. As such, not all terms from the information booklets apply to all loans. The Schedule (or Letter of Offer) that creates the contract will bring only the relevant terms from the UTC into force in a regulated home loan contract, as seen in the screenshots from actual ANZ and Westpac contracts above. So despite banks including many clauses in their information booklets and UTC, when it comes to the actual contract they exclude certain non-NCCP-compliant terms from regulated home loan contracts.
The clause quoted above from ANZ's info booklet doesn't breach the Consumer Credit Code, because it doesn't specify a particular situation. It's a broad clause that talks about defaults relating to security value. Whether or not a bank breaches the Code depends on how the clause is used. Banks must go to court to obtain a repossession order if they wish to repossess a home. The courts will then assess the situation to determine whether the bank is trying to make the consumer liable for something ordinarily outside his control.
Did the value fall because the owner knocked down the house, used it as a drugs lab, or let it fall into serious disrepair? If so, the bank is not trying to make the consumer liable for something ordinarily outside his control. It's likely the court would approve repossession.
Did the value fall simply because general market values fell? If so, the bank is trying to make the
consumer liable for something ordinarily outside his control. The court won't allow the repossession. The
banks know this, so they don't even try.
Even if the above clause existed in a regulated contact (and not just in an info booklet) then it could only be used in circumstances where the bank is not trying to make the consumer liable for something ordinarily outside his control.