I’ve been away for a while but I encountered a case as I was reading some judgments on the weekend. This may be old news for this board but have a look at case number 90 Miller v Gunter at:
http://www.courts.qld.gov.au/qjudgment/sc05_051.htm
I have never been fond of wrapping for ethical considerations and this case seems to confirm my view. Are the margins involved the same as other wrappers in this forum use? I would be interested in some feedback.
As a solicitor I am curious to see if any action is taken against the two solicitors involved (one of them a local that I unsuccessfully went for a job with years ago!!).
I always thought that wrapping was a problem with the Consumer Credit legislation but that wasn’t raised. I expect the decision will be appealed anyway so lets watch and see. Comments as to whether this will change any wrapping tactics in Qld please!
sorry, but that is not exactly wrapping…
What this guy was doing is called fraud…
proper wrapping discloses information about the deal…. this guy was simply trying to scam people…
Marking up a 90k house by 50k is just plain fraud…..
As much as I am not a fan of wrapping, I must agree with the Pelican boy. It is clearly fraud but I am certain there will be adverse repurcussions for wrappers especially when the media misinterprets events and blows it out of all proportion.
Robert Bou-Hamdan
Mortgage AdviserI agree that this is not wrapping.
It seems that the organisers were real estate agents and were inflating property prices and selling properties to unsuspecting victims. They gave misinformation to the bank and used the bank’s policies on valuations to obtain loans greater than the property value.
Terryw
Discover Home Loans
North Sydney
[email protected]Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Reemmber when flipping was fashionable? Can’t see much difference here- buying for one price, selling for another. I see wrapping as flipping basically- plus the extra interest points.
It’s interesting how the courts interpreted the meaning of uncoscionability in relation to the buyer’s backgrounds:
“…spoke English as a second language. They were inexperienced about financing real property transactions or indeed in understanding commercial transactions generally. They were on a very low income and of limited education.”
It demonstrates how courts view the systemic targetting of the disadvantaged.
It’s also pretty sad that the pastor ripped off his churcho-goers- I hate that kind of hypocrisy- a blight on Christianity.
kay henry
I believe what has happen should sit under the heading of “organised crime”.
Aside from the point of wrapping being one person’s cup of tea or not, there are ways to do it properly, openly and fairly….
Cheers
At the risk of being attacked and abused – which, I gather, is one reason why so many are so reluctant to post on this forum – I must say that Kay has got it right and Pelican, as well-intentioned as he may be, has got it wrong with his fairness comment.
The simple philosophical, moral or ethical fact is this – “There is no right way to do the wrong thing.”
Other than those involved in it, the rest of the world is all but unanimously anti-w rappin g. I think that anyone considering it right now needs to be very careful. I have it on good authority that the entire process could be headed for a huge fall.
Leo
Leo, let me know if you need any protection!!!
Robert Bou-Hamdan
Mortgage AdviserHi All
An interesting legal commentary on wrapping/vendor finance in Australia can be viewed at:
http://www.businesslawyer.com.au/fr_property.html
Use the “click here for more information” button, under the VENDOR FINANCE FOR REAL ESTATE heading.It is also worth noting/declaring that this site belongs to a lawyer who prepares a lot of paperwork for vendor finance transactions but it does give a good history of vendor financing in OZ and the current state of play with regard to regulating vendor finance transactions throughout the country.
Cheers, Paul
Paul Dobson | Vendor Finance Institute
http://www.vendorfinanceinstitute.com.au
Email Me | Phone MeAn alternative way to finance your home.
Leo, who are you to judge ???? Vendor finance is done on many things in this world of ours… not just houses….
Who says, wraps are wrong ?? do you know how it is done ? properly ??? obviously you don’t.
If you have it on good authority, please provide facts behind your comments….. until then, you are talking rubbish….
Thank you for the replies and thanks PaulDobson for pointing me to the NSW solicitor’s site.
I agree that in this particular case it was easy for the Court to punish the wrapper. I am curious that if the buyers / wrapees were english speaking and fully informed and there was no church involvment would the Court still allow or disallow the wrapping?
How much mark up in a price is reasonable?
I’ve had a couple of clients come to me asking about watertight wrap agreements and are unhappy when I tell them that there is no such thing. From a risk managment p.o.v. I wonder if you can get insurance against the prospect of loss/forfeiture? Hmmm
Hi lawboy
I’m not sure about the availability of an insurance policy for the prospect of loss/forfeiture but I do know that the insurance company, Australian Unity do have a special “building insurance” policy for homes sold using Instalment Sales Contracts. Herein they register the “wrappees” interest in the property (along with the interest of the wrapper’s first mortgagor). They also cover the wrappers for malicious damage caused by the wrapees.
I hope this helps.
Cheers, Paul
Paul Dobson | Vendor Finance Institute
http://www.vendorfinanceinstitute.com.au
Email Me | Phone MeAn alternative way to finance your home.
Rob, Well, buddy, you are right. What a rude and angry fellow that Pelican is. I have no intention of being the same in reply because I think that bad manners are a sign of a bad character. Also, no matter how rude some rappers may be I can understand how nerve-wracking it must be to live on both the legal and moral edge. And all for a few measly bucks a week. No wonder raps is not known as the thinking-person’s investment.
Regards
Leo
Some of the wrappers are very sensitive. You can’t blame them though – they do cop a hiding in the media.
I don’t know much about Pelican Boy but there are a few wrappers who operate extremely professionaly, transparently and very fairly. They regularly post here. I am sure they will pop up in a post or two.
Robert Bou-Hamdan
Mortgage AdviserI am sure your right. Not all rappers intend to be rippers; it’s the method which means that many well-meaning people get suckererd into it thinking that it’s legit. One of the biggest blunders made by the NRs (nasty rappers) is to pontificate that raps and vendo r finance are the same thing. Real vendo r finance means the buyers get to see their name on the title. Raps means no such thing.
Gotta get back to work now.
See ya
Leo
Leo
Good to see that you nearly doubled the number of posts you have made to this forum by your comments regarding this question.
As someone who makes his living from wrapping and providing Vendor Finance in Qld(Yes you are right they are 2 separate types of lending) I totally disagree with your cast on the professional wrapper.
Similar as has been stated in previous answers the case you refer to is a simply matter of FRAUD.
With all of our wrappees (we will ignore clients to whom we offer Vendor finance to at this stage) we insist on the following:
1) A full application form showing serviceability and a proven past background, credit search etc be undertaken prior to any pre-approval.
2) If the appliation is successful and meets our underwriting criteria then a pre-approval letter is issued. This clearly states the maximum purchase price they can go upto and then provides both a monthly repayment and onsale price we would offer the property to them at.
3) All properties are found by the wrappee who negotiates the price with the selling agent first then refers to us to take over the formalities of Contract.
4) If the purchase price we buy the property for is different to the maximum price shown in the initial letter of offer (obviously less) then a new Letter of Offer is issued showing again the onsale price and monthly repayments.
5) Our Contract with the Vendor sibject to and conditional upon us executing a sale contract to our purchaser.
6) The Installment Contract (if using this form of document) is drawn up and sent only to the buyers Solicitor. The Contract is fully compliant with the UCCC.
7) The documents must be signed in the presence of the clients Solicitor who is then required to provide us with a Certificate of Independant Advice informing us that he has explained the difference in purchase price to the buyer.Prior to any application being taken the potential buyer receives a standard letter of explanation as to what our Installment Contracts invloves as well as a detailed 4 page Q & A document drawn up by our Lawyers which we suggest they read in conjuction with their own Solicitors.
Having presently 187 wrap deals that we own and manage I would hardly call it “A few measly bucks a week”. It certainly helped me retire in my 30’s. To date we have a list of clients as long as your arm who have provides us with letter of thanks and referral business from family or friends.
Hardly the stuff that NR’s are made of. My 11 daughter tells me that rapping is fact a type of music but what would a NR now anyway.
Cheers Richard
richard at castlewhite.com.au
Email me for details of our Qld wrap CD which gives you a full Installment Contract.Richard Taylor | Australia's leading private lender
Leo,
Interesting that you’re in a position to speak for a world of people who don’t post on this site and for another of non-wrappers. Very enterprisng of you.
Anne.
Leo,
Still waiting for your facts…… as usual a newbie who posts like he knows everything….
If you care to get technical, wraps & VF are technically different…..
Sorry, I’m into rock n roll, not rap…..
My company fully discloses to the banks, and the wrappee…. AND we are working with the banks on having the wrappee’s interest registered so that if anything happens to my company, the wrappee is protected…..
Good job at a windup Leo, doesn’t work…….
If you think MY posts are nasty, wait till you cheese MA off…. then you will see somethin !!! right Rob ??? !!! LOL !
I periodically have the wrapping debate with friends & family. They all argue that it is immoral, whereas I think it is just another way to get a decent return on your investment.
(I also think that generally there are good reasons why wrappers are wrappers & wrappees are wrappees).
IMHO as long as people are clear about the conditions of the contract they are entering into, any margin is acceptable. The market value for a product is the price people are prepared to pay. Different circumstances will mean some people will be willing to pay more than others.
Cheers,
Jason.Moderators,
Can this be locked please…. we are so way off topic it’s not funny……
We seem to be going over old ground here…..
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