Wrapper defaulting

skippygirl

that may appear to be logical, seriously doubt the bank would see it like that.

however..

wes, do you have that agreement with your bank in writing?

cheers

brahms
Mortgage Broker
[email protected]

I find it interesting that all the wrappers I see on here go on about all these deals with “A BIG BANK” but never tell anyone the names of the bank they deal with. Unless you are an experienced wrapper, I highly doubt any of the major 5 will permit a loan to go through as a wrap deal.

Regarding getting a bank to put it in writing that they will sell a property to a wrappee in the event of the wrapper defaulting, IT WON’T HAPPEN!!!

There are rules about taking possession of property and mortgagee sales to maximise the amount received from a sale. Auctions are often used as the lender has a requirement to obtain as much as they can to cover their costs and leave something extra for the borrower who defaulted. I can’t see the lender honouring an agreement to sell a property to a wrappee especially if the property value has surpassed the agreed purchase price in the wrap contract.

Robert Bou-Hamdan
Mortgage Adviser

M: 0414 347 771
E: [email protected]
W: http://www.mortgagepackaging.com.au

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Comments made are of a general nature and should not be construed as individual advice.

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Hi Rob,

If you don’t mind me commenting here, from a wrapper’s perspective….!!!

I have to agree with your first comment here, but feel that it is more to do with not having someone take advantage of the building of a relationship with someone wading in a possibly ruining things…. As a broker you will probably have seen that often it is HOW you approach a bank and WHAT you SAY that is the difference between loan approval or rejection.

As you know wrappers do tread a fine line, but I can assure you the BIG 4 banks WILL do wrap loans directly AND fully disclosed….
[blush2]

OK, on this one, yes, we live in hope, and I’d say, lets give this time for the bank in question to work on it.. If they CAN see a way to do it, it would be a great way to protect the customer… and I applaud people out there trying to do this….

Let’s give it time !!! It’s a step in the right direction…. if it is possible.
[blush2]

Rob,

OK, see where you are coming from…. i.e. the new starters out there….. true…..

For the bigger guys it’s different…. correct…..

For us, we started out at the blue guy, who then turned negative on wraps ( which we did disclose ) so, we went to a community bank, sat down with the manager and explained in great detail what we do, and, our way of operating. we did a LOT of deals with them, until their conservative lending ( LVR’s ) policy got in the way. We are now at a big 4 bank, and they have full approval to give us wrap loans.

IF anyone ever asks us, we do direct them to our contacts, but will not display the information for every tom, dick & sally……

Rob, you obviously know a lot about the ins and outs of UCCC, so I trust what your are saying on this.. BUT….. I still am hopeful that a way can be found which will protect the wrappee….

Merry Xmas / Cheers

Scott

You may know the cost of everything…. but what about the value ????

I use this simple solution to put all parties at ease…… I show proof of the omrtgage and supply the direct account number so that hte payments are made directly into the account with the mortgage on it …. usually I just add a sub clause to my special notes section of the paperwork….. this way the wrappee knows that the only way the bank can foreclose is if there is no mayment made by themselves…… also why would a wrapper default on his own property when it causes all other transaction to be extremely difficult if you come up on the radar (in the banking system) as a bad payer.
Cheers,
Kiwi[baaa]

Hi Robert….. It seems you enjoy a good banter….
1. Perhaps my phrasing is different, whatever you would like to call it when a lender forces a sale/mortgagee auction according to contractual subclauses in mortgage documents to a defaulting mortgagee… I call it foreclosure as it is something that we all inderstand
( I have attended a mortgagee sale/auction once or twice).

2. House would be risked only if the “wrappee” is not making the payments as they are paying directly into the account responsible for the mortgage…. so if the “wrappee” is defaulting then I am going to be taking action to resolve issue and quite obviously would have a “PLAN B” to recover from such a challenge.- think of the worse case scenario and work out at least 3 plans of action to resolve or exit the transaction… I think they call it hedging in the share game?

3.If a lender has any unresolvable financial challenges with a non payer…. in most cases thay will list a default on Baycorp….. also when you apply for any mortgages… one of the things you must do is show bank statements to show any issues at all. Some lenders will place a mark on the baycorp … then will issue a resolution mark once all proceeds have been resolved from the sale of the asset-or cut thier losses. However there would be a time where any lender (Wrapper) will see this on any credit checking system such as Baycorp.

Cheers,
Kiwi[baaa]

Robert,
I conceed your point – I am meerly trying to demonstrate that you would not need to go there if you have your plans in place ready for the day of default (hoping that it is never going to happen of course).

EG> you have bought the property at a good enough discount so that if you need to get out fast…. you can sell or flip at the drop of a hat….. or you have set up a LOC or Redraw facility to give you the time to cover all of your losses and make up the payments that your wrappee is defaulting on.
REMEMBER WHEN THE RAIN STARTS THE LENDERS WILL TAKE AWAY YOUR UMBRELLA… you do not want to be in a position that you have to access funds at 15-30% just because you thought it would never happen.

Best of luck all.
Kiwi
[baaa]