Possible relief in sight.
Australian Courts have begun to show a trend of “cracking down” on banks and poor lending procedures, particularly with regard to mortgages. Recent decisions have indicated a strong approach taken by Australian Courts toward mortgage lending that is considered “unfair” or “unjust”.
The hard-line approach taken by the Courts has been strongly influenced by the power imbalances that exist between the average borrower and large lenders. Many mortgage loans provided by banks, pre Global Financial Crisis period (2007) were approved to borrowers despite being contrary to proper lending guidelines and policies both by industry and legal standards.
Many lenders have been found by Courts to have made mortgage loans to people on terms that make repayments simply unsustainable, with a common form of lending known as “asset-lending” often employed.
Asset-lending is commonly known as the entering of a loan agreement without regard to the borrower’s means and ability to repay. The lender, when employing a method of asset-lending, will simply rely on the sale of the secured asset to satisfy the loan debt. To employ such a strategy shows utter disregard to the fact that in many instances the asset being sold to satisfy the loan is the family home, leaving borrowers and their families in dire straits financially, whilst banks simply foreclose at will to satisfy their debts.
This form of loan entering was used frequently to instantly obtain individual employee commissions as a reward for securing loans, with wonton disregard being shown for the borrower’s actual abilities to repay the loans they were granted.
Often, in pursuit of these individual commissions, loan applications listed exaggerated information inflating borrower’s incomes and occupational titles.
In light of these improper lending practices, Australian Courts have begun to relieve home owners struggling to pay mortgage payments by reducing amounts owed to lenders and, in some instances, declaring remaining mortgage debts entirely void, relieving homeowners financially by ruling there to be no loan to repay.
Many banks, to prevent dangerous precedent being set by the Courts against their mortgage lending procedures, have begun to simply settle claims at an early stage, resulting in the lowering of mortgage debts by tens of thousands of dollars in some cases.
If you believe you may have been granted a loan under unfair or improper lending procedures, you should first request a copy of your loan application form to check your details were correctly recorded in being granted your loan. If information is listed incorrectly in any part of your loan application, you may have the legal right to a reduction or even complete removal of your mortgage debt.