<Deleted – See Nat R>
Rob,
Please excuse my ignorance on this matter, which of course, makes me unqualified to answer your question in any event….however……
The issue of trying to comprehend both the ethical AND the legal stand in undertaking such a project (i.e. wraps) could lend itself to some heavy debate I should imagine. As people’s views are different so too will be the way they address your question.
My personal view, as long as it is legal and you have 2 consenting parties willing to enter such agreements, I can’t see a problem. On an ethical level, well the jury isn’t out on my thoughts there.[blink]
Jo
Rob and Jo,
This has been done to death time and time again. If you’d like to do a search you will find enough posts to keep you busy all long weekend. It is a topic that produces little fact and very much anger and personal opinion. Members have been banned due to their views on this topic.
I’d suggest you let this one rest, especially as this site has more than enough acrimony floating around at present without digging up this old chestnut.
Regards
Nick
Its interesting how many raise a question of ethical behaviour in relation to these types of transactions. It prompts me to ask two questions:
1. Why the (unspoken) assumption that the ‘advantaged’ party has somehow a greater knowledge and awareness of the risks and is therefore unfairly treating the other? One would hope that (in a well constructed deal) ALL parties are aware of the possible pitfalls and have accepted their share of risk. In this case, ethical behaviour is not a factor.
2. What is the difference, in terms of risk and obligation, between this and other forms of ‘middle man’ transactions? I think the only difference is that it’s relatively new and so people may be tempted to be suspicious of it.
Steve
If you are worried about the disadvantages of a wrap discussed above, why not use a wrap contract that you help write, so that if the time comes, you cover yourself, and the wrappee, from all possible angles.
It is up to you to explain to your wrappee what it is all about. Write it yourself ( with legal help of course ) to placate your conscience.
At the end of last year I almost became a wrappee myself. But because of oppurtunites at work etc in the end I declined. The wrap was explained very well to myself, and my girlfriend. I understood the consequences etc of things going bad. I understood all this because the wrapper was, and still is, a friend, and explained it properly.
Do the same, things won’t seem so bad.
Cheers
“Looking forward to the day when I can tell the boss where to go”
Originally posted by The Mortgage Adviser.:Once all lenders agree to wrapping, I am more than happy to jump in head first and sell these products… if done properly!!!
Quite a few of the bigger lenders are providing fully disclosed wrap finance…
We deal with two of the biggies and they are fully aware of what we do…. we also deal with a community bank, and, they also are aware….
As far as protection goes, it is up to you as mentioned here, to draft up a legal contract which you are comfortable with, and, more importantly, I’d suggest, also complies with the UCCC.
The rest, as some say, is about how you manage your client, how you assess your risk, and, how open you deal with the people…..
If you are interested in wrapping, I would suggest you visit the Vendor Finance Association (wraps) website at http://financewraps.asn.au and obtain more information.
Good luck in your research…
Scott
Pelican Investments
http://www.pelican-invest.comOriginally posted by The Mortgage Adviser.:I am just asking why there isn’t adequate regulation in this fast growing investment area to weed out the shonky operators (which are in every industry)???
Hi Rob,
I would offer that in the main legislators are always playing catch up with any unethical people – while many people do the ‘right thing’ in all aspects of society, there are the few who want to test the generally accepted boundaries, and then there are those who will step over those generally accepted boundaries for their own ends.
In the normal cycle of events people step over the line first and then the legislators react. Off the top of my head a few examples would be elite athletes who take performance enhancing drugs, financial advisors who put their commissions ahead of the clients needs, ditto for the brokers who churn loans, pecuniary interest legislation in all levels of government, politician’s travel allowances and so on – in some respects the list is probably almost endless and would to some degree or other touch a great many occupations professions through their respective historical evolution.
I suspect in some ways wrapping will end up the same way – rightly or wrongly – legislators will step in to protect the naive from the vultures and while this happens the honourable wrappers and their learned/informed clients will largely continue to do business as they always have.
Hope that makes sense[exhappy]
Derek
[email protected]Property Investment Support Available. Ongoing and never stopping. PM welcome.
Originally posted by The Mortgage Adviser.:Can one of the wrap advocates plese tell me what is to stop the vendor giving nothing back to the buyer who just lost everything?
Hi Rob
I can only speak on my own behalf, as I can’t vouch for what other people do.
But in my contracts (drawn up by a legal expert) there are very specific steps that are taken in the event of a default. These include valuation of the property or even sale if required, what fees and charges are incurred in the process and it’s quite clear that any money “left over” goes to the wrap buyer, not me.
So if the wrap buyer defaulted and had maybe $5,000 equity in the property, they’d probably get very little after all the default charges and legal costs involved.
However if, as in your scenario, they had $150,000 equity, they would certainly get a large portion of it back.Keep smiling
Felicity
In the tradesman senario who breaks a leg and is off work for 6 months…….
I say any tradie worth his salt has accident insurance along with public liability
Indeed in strata industry no one can get within coo-ee of a building without proper insurance following a strata manager being sued for not policing this
Also income protection in general is advisable
Maybe something like this can be writen into the contract
Cheers
Geoff
“When you can walk on water…take the boat”
Rob
Well, personally I would like to see it made an industry standard in some way!
Certainly contracts drawn up by my lawyer in Melbourne (he looks after lots of Vic wrappers) always contain this type of default contingency (unless I suppose I specifically requested it was removed). However I know he believes that a default clause is essential, otherwise you’d more than likely find yourself running foul of the Consumer Credit Code in Victoria anyway. Which would mean that in the event of a dispute the contract would be declared invalid. So it protects my buyer’s equity, and it protects me too!!!
I don’t know what would be required in other states.Keep smiling
Felicity
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