Hi
This is a bit of a long story and I presume this particular broker will read this too.
I had two properties in WA with 2 separate loans through the same mortgage manager and bank.
I needed to draw on the equity to buy some more properties and wanted to use the equity from these 2 properties.
I called upon a new broker who I had not used before.
I presume that since it was with the same mortage manager and same bank that the broker would do a simple equity drawn which would entail a new loan.
I received mortage documents from the bank, signed them and sent them back.
It is now that I have found out that not only did he draw on the equity but he refinanced the 2 other loans as well with the SAME bank.
Obviously I did not read the paperwork properly BUT now I have been charged with $10,000 worth of break fees (keep in mind its through the same bank) and this was not disclosed to me, I knew NOTHING about this.
I have complained to the broker who keeps brushign off my comments and has to me, that I should not worry cos my I have made alot of money. I think $10,000 is a little too much to not worry about.
I have called the bank and the morgage manager who have told me that this should have been clearly disclosed, what he was doing and the charges applicable.
Can any of you confirm this???
I am thinking he refinanced them all to earn the trail commission instead of my old broker???????????
Sorry just wanted to say that this broker does not contribute to the forum or post messages.
Sorry just dont want to make the other brokers look bad
As you would be aware I have provided you with options in an email and I hope this helps.
When choosing a broker always make sure they belong to a governing body such as the MIAA. This body is there to investigate any unproffessional behaviour and can take disciplinary action if necessary.
Ask what training they have and if you can see their certificates this is not too much to ask as you will be putting a lot of trust in them. Certificate 4 in Mortgage Broking is hopefully what they will have
Wayne Skewes
Mortgage Broker
Email [email protected]
http://www.eaussie.com.au/Mortgages/Aussie_Mortgage_Adviser.asp?ContentID=852280
Refinace, Loan Consolidation, Owner Occupied or Investment Finance. Free Service I come to you!Just adding further to what Wayne said…
In this scenario i doubt the MIAA will be of much use in this case. The MIAA is more of a figurehead professional accreditation service which most lenders require you to be a member of before authorising you to write loans on their behalf.
COSL is the credit industry ombudsman and in my opinion would be the people to contact in your particular case. MIAA members are now required to be a member of COSL so if your particular broker has MIAA accreditation they will also be a member of COSL and they will deal with your dispute on your behalf.
That being said, if the broker isn’t a member of either COSL or the MIAA there isn’t much you can do short of initiating legal action against the broker in question. You mention your properties are located in WA, is your broker also located in WA? If so WA has a licencing requirement for brokers which the other states do not. I am based in QLD so i am unfamiliar with the licencing process but i imagine there would be stricter requirements than elsewhere to operate as abroker. This would mean there is a higher chance they are members of an external dispute resolution service such as COSL. There are WA based brokers on this forum so perhaps they could elaborate.
With the details provided it appears as if the broker has possibly acted outside both the MIAA code of conduct (if they are a member) and more importantly the UCCC (uniform consumer credit code).
All fees and charges applicable MUST be disclosed to you and there must be no deceptive conduct at any stage during the process. Whilst the fees and charges in refinancing may well have been disclosed on paper, in my opinion it is dishonest of the broker to not inform you orally also.
Failure to inform you orally when you couldn’t be reasonably expected to realise the implications of the refinancing of the original loans cost be construed as misleading under both the MIAA code of conduct and also the UCCC. Please not this is not legal advice, you should seek this independantly.
Regarding the original loans, i assume they were a fixed rate or honeymoon product and the $10000 were break fees? It is almost unheard of that lenders charge break fees for a product switch where the original loan was a standard variable product.
My advice, find out whether your broker is a member of COSL and make enquiries through them if your broker is unwilling to discuss the matter further.
Hi queengucci
As per what the others have said, this is a no no as far as conduct goes. While I am relatively new in the industry, I have done my Cert IV in financial services, and only yesterday did the other exam in order to becomes an Accredited Mortgage Consultant, with the MIAA – reason I mention that is because all the trade practices act, and other areas are fresh in my mind! Obviouly if your properties are investment properties, you are not covered by the UCCC legislation, but there are other laws that still apply. I honestly can’t imagine why anyone would suggest terminating a fixed loan earlier and incurring fees like that unless there was some special circumstances, but these should have been disclosed. Depending on who the lender was however, it may have been necessary to refinance in order to access new equity, but again, being still with the same lender makes this scenario seem a strange one too…Please keep us posted as to how you go.Good to see some good feed back comming in and yes you are right the UCCC would not be involved due to being investment properties. My suggestion for the MIAA was more to find what direction to take and I am sure they would have refered on to the Ombudsman and thanks for adding that. I am sure that if the person is an MIAA member their could be implications such as some formal discipline or at least an enquiry
Wayne Skewes
Mortgage Broker
Email [email protected]
http://www.eaussie.com.au/Mortgages/Aussie_Mortgage_Adviser.asp?ContentID=852280
Refinace, Loan Consolidation, Owner Occupied or Investment Finance. Free Service I come to you!Not only will he receive the trailing commission, but an upfront commission as well!
But I have never heard of someone being refinanced into the same lender.
Terryw
Discover Home Loans
Parramatta
[email protected]
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Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Hey Guys
Thank you so much for your responses.
I am in WA and the broker is in another state, but i also found out today that when a broker is dealing with a consumer in another state, then the state laws of the consumer apply. Therefore WA law is applicable in this case.
The application form to draw my equity was on the same application as my refinance. Thats why I didnt pick it up.
I agree and I am cross at my bank for refinancing the same loan, for EXACTLY the same amount for EXACTLY the same properties. And then charging me $10k.. what a joke.
I made loads of phone calls today…. to the FBA who told me I had no legs to stand on and told me im an idiot for not reading all the documents. I told him that the $10,000 was not put on anything or anywhere, so how was I meant to read something that was never there.
FBA told me that its my problem and the broker had no duty to disclose anything, esp because I am a property investor. He was WRONG!
I got in touch with the Mortgage Brokers Association and the lawyer there used to be the regulator for the UCCC. He told me that ALL mortgage brokers are monitored by the UCCC. That it is a national code that all brokers must comply with in all states.
Obviously the code is only applicable to consumers. Even though I am a property investor I still fit into the consumer category because I do not have a net worth of $2Million nor do I earn $250,000 per year, if I did I would not fit the consumer definition.
According to the UCCC Mortgage Brokers must present all consumers with comparative tables and set out a schedule of all fees and charges, clearly and unambigously.
I have gone all through every piece of documentation and contract and it is outlined NOWHERE not even at settlement that $10,000 was being taken out of my equity loan. They simply dumped the funds into my account minus $10,000.
The bank and the mortgage manager are stunned, and have confirmed it is not in accordance and that refinancing was completely unnecessary. My broker still has no answers for me but to “not worry about it”.
I have sent his complaints manager a 5 page letter including all emails to confirm that he told me “Not to worry about it” and sections of the law applicable…… with a letter of demand requesting they reverse out the transation which is not that difficult considering the loan has been refinanced with the SAME bank for the SAME AMOUNT.
This broker has cost me the following unnecessary fees, that I shouldnt worry about
1. Mortgage Stampe Duty
2. $10,000 worth of break costs
3. Fixed loan for 3 years. I was planning on selling the properties early next year and will have to pay further break costs
4. 0.75% increase in interest rate on $800,000Now tell me guys, would you not worry?
Hello queengucci
What a horror story. It seems to me that the bank should have picked up on the nonsensical request to refinance 2 loans to the same 2 loans specially as one was a fixed rate loan which not only attracted breakfree fees but a higher interest rate as well.
I would have thought that they would have queried this with you themselves if they are worth their salts.
Have you tried talking to your bank manager about this aspect of the situation? I would think that this makes them look so unprofessional that they may be willing to reverse the whole thing?. I mean you are a good customer if one of your loans is for $800K.
I’m probably being naive but maybe worth a try?
Good luck and don’t give up.
ElkaI think they all have things to answer for and I think my broker wanted the trail commission because it was originally finance through another broker.
The bank told me a letter SHOULD have gone out to me confirming break costs ect but they have no record of it.
I have also checked my “Mortgage Contract” and “Settlement Disbursement Fees” and the $10k is not NOWHERE! It was NEVER disclosed by ANYONE!
I have a headache :< poor me! :>
Queen
The $10K was probably listed in the original loan contract, but it may have been listed as a %.
I cannot understand how a lender can charge you an exit fee when you didn’t exit.
If you want, fax all of your loan agreement to me and I will have a look at it. 1300130010.
Terryw
Discover Home Loans
Parramatta
[email protected]
Sign up to my mailing list.
Just send me a blank email, with “subscribe†in subject line.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
Originally posted by queengucci:Hey Guys
Thank you so much for your responses.
I am in WA and the broker is in another state, but i also found out today that when a broker is dealing with a consumer in another state, then the state laws of the consumer apply. Therefore WA law is applicable in this case.
The application form to draw my equity was on the same application as my refinance. Thats why I didnt pick it up.
I agree and I am cross at my bank for refinancing the same loan, for EXACTLY the same amount for EXACTLY the same properties. And then charging me $10k.. what a joke.
I made loads of phone calls today…. to the FBA who told me I had no legs to stand on and told me im an idiot for not reading all the documents. I told him that the $10,000 was not put on anything or anywhere, so how was I meant to read something that was never there.
FBA told me that its my problem and the broker had no duty to disclose anything, esp because I am a property investor. He was WRONG!
I got in touch with the Mortgage Brokers Association and the lawyer there used to be the regulator for the UCCC. He told me that ALL mortgage brokers are monitored by the UCCC. That it is a national code that all brokers must comply with in all states.
Obviously the code is only applicable to consumers. Even though I am a property investor I still fit into the consumer category because I do not have a net worth of $2Million nor do I earn $250,000 per year, if I did I would not fit the consumer definition.
According to the UCCC Mortgage Brokers must present all consumers with comparative tables and set out a schedule of all fees and charges, clearly and unambigously.
I have gone all through every piece of documentation and contract and it is outlined NOWHERE not even at settlement that $10,000 was being taken out of my equity loan. They simply dumped the funds into my account minus $10,000.
The bank and the mortgage manager are stunned, and have confirmed it is not in accordance and that refinancing was completely unnecessary. My broker still has no answers for me but to “not worry about it”.
I have sent his complaints manager a 5 page letter including all emails to confirm that he told me “Not to worry about it” and sections of the law applicable…… with a letter of demand requesting they reverse out the transation which is not that difficult considering the loan has been refinanced with the SAME bank for the SAME AMOUNT.
This broker has cost me the following unnecessary fees, that I shouldnt worry about
1. Mortgage Stampe Duty
2. $10,000 worth of break costs
3. Fixed loan for 3 years. I was planning on selling the properties early next year and will have to pay further break costs
4. 0.75% increase in interest rate on $800,000Now tell me guys, would you not worry?
Hi again
Yes, it is something to worry about. But I think you may have over looked a few things.
The UCCC does apply to all brokers, but certain loans are not covered by the UCCC, these include investment loans. SO I believe you are not covered in this case.
Stamp duty. If your loan hasn’t increased on the refinanced portion, you shouldn’t be charged stamp duty again. If you have you can probably get this back easily. Ring the Office of State Revenue of your state. Or do a web search and you can probably locate the forms.
If you were put in a 3 year fixed rate, this must have been clearly documented on the loan agreement. As with the interest rate.
Break costs. Maybe you had a fixed loan originally, and the break costs are a result of breaking this loan??? If so, these sorts of costs cannot be calculated at the time of the loan, and the amounts will depend on interest rates at the time. Other than this, I cannot think how a lender could charge you break costs or exit fees if you are not leaving them. very strange.
Let this be a warning to others – please read you loan offers etc before signing. Once you are signed up, you are generally bound.
There are ways out of a contract – unconscionable conduct by the broker, duress etc. Mere threat of legal action may be enough to force compensation.
Terryw
Discover Home Loans
Parramatta
[email protected]
Sign up to my mailing list.
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Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Hi Terry
I understand what you are saying, YES i signed a loan document on “BANK OF ADELAIDE” letterhead. The loan was already with this bank and I NEVER instructed anyone to REFINANCE my loan but simply draw equity.
I have been mislead and I had to pay break costs but I didnt know I was breaking any loan.
I wont stop until I get a resolution. I am a 28 year old female and its principle, not money.
Its strange I was told by the UCCC old regulator that you had to be worth a certain amount of money before you werent covered.
Will let you know what happens. I think I may instruct a lawyer if I cant go the UCCC or Credit Ombudsman way. Im not gonna let him get away with it.
Thanks!!!
Ah Terry the reason I have been charged break costs is because the two loans were originally with a mortgage manager! my broker took them from the mortgage manager and placed them directly with the bank.
That is how I got charged break costs!
I called my mortgage manager a few days after settled and they said “We cant help you, your loans have been closed down” and I was like “WHAT, how”
Ah Terry the reason I have been charged break costs is because the two loans were originally with a mortgage manager! my broker took them from the mortgage manager and placed them directly with the bank.
So you are saying you have changed from one lender to another without knowing? or did the Mortgage manager have you in the Adelaide bank?
Wayne Skewes
Mortgage Broker
Email [email protected]
http://www.eaussie.com.au/Mortgages/Aussie_Mortgage_Adviser.asp?ContentID=852280
Refinace, Loan Consolidation, Owner Occupied or Investment Finance. Free Service I come to you!Did you ask your (ex)mortgage manager wether they would have allowed you to draw equity in the form of another loan?
Maybe they couldn’t/wouldn’t so your broker went elsewhere …i.e directly to the bank ?.
Don’t get me wrong. I am certainly not trying to find him an excuse. Whatever the reason for his actions he should have sat down with you first and explained all the costs and ramifications of what he was going to do. His actions were 100% wrong.
I’m also a bit puzzled at the high breakcosts. I thought that if you terminate a fixed loan early but the interest on the loan is lower than the current interest rate (by your post 0.75%) then the bank is actually happy. It can now lend the money at a higher rate so your break cost are negligable or even zero. I thought the break costs were to compensate them for loss of interest. Am I wrong?
Let us know how you go.
Good luck
ElkaOK the loan was managed through Homeloans Limited through AdelaIaide Bank. The loan has been taken from Homeloans and put DIRECT with Adelaide Bank now.
Like I said, the equity application form was the same form used to refinance as well and cos it was on Adelaide Bank letterhead and I was with them anyway, I thought nothing of it.
When I called Homeloans they told me there was no reason for equity to not be simply drawn through them via another loan.
Adelaide Bank have said the same thing! they are also confused.
There was NO REASON or any benefit for my loan to be closed down and refinanced with the SAME bank.. and my broker has given me no valid reason except that it was faster and easier and that is why it was done!
Faster and easier for that amount of money without my knowledge, no way!
Not disclosing things clearly or fees.. no way!
I agree sometimes people need to refinance for various reasons and have no options. My partner and I earn good incomes and have loads of equity.. it was completely unncessary!
That is the trouble with Adelaide Bank, they also sell their products through about 4 mortgage managers, all at potentially different rates.
If you do refinance out of one of these mortgage managers there are generally high exit fees, even on variable loans. And going back into the same funder still would result in these charges.
it seems like Queen didn’t know, or realise, because she thought it was just an increase. Being on the Adelaide forms would probably wouldn’t make you think of it as a refinancing as that was the original lender. So it is understandable that Queen wouldn’t have picked it up, unless she had read the documents carefully.
Terryw
Discover Home Loans
Parramatta
[email protected]
Sign up to my mailing list.
Just send me a blank email, with “subscribe†in subject line.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
Dear Queen,
Sounds deplorable to me. Common sense (and decency) would suggest that the costs should have been outlined to you.
What stage are you up to now?
Have you managed to get any sort of resolve?I was interesed to read the discussion about whether you as a property investor, i.e. using mortgages to buy property for business or investment purposes, were covered by the UCCC. Like Terry, I would have assumed that you weren’t?
Good luck with it all, again like the others if can be of assistance please let me know,
Regards
NeilNeil and Kate Gorman
Mortgage Choice
0430 500 848But Terry, surely the finance broker knew that it was not in my best interests to finance and cause all thse costs. Surely, he was only taking his best interests into consideration.. to refinance to earn to trail commission and the loan commission.
I was told by the old regulator of the UCCC that I am included in their code because I am not defined as sophisticated ie. worth a certain amount of month and also that it was still residential property. So I am not sure who has their facts wrong..
At the end of the day, the broker has a duty to act in my best interest surely, this would be covered with Uniform Credit Code or trade practises or somewhere.
He has either deceived me or is completely incompetent to be doing his job.. and has still given me no clear answers to why he did what he did
Surely, there is a law against this!????
I will be going Bank of Adelaide for this too and all of them, cos even during settlement disbursement these fees have not been included ANYWHERE but yet Bank of Adelaide paid it to Homeloans automatically… they just took it out of my equity.. it is noted NOTED nowhere…I did NOT sign anything to give them the right to pay that money.
I will call UCC on Monday to get the definition absolute… and I will still be lodging a complaint with Unform Credit Code cos they are and MIBA who they are also members of.
I will let you all know what happens.
I am a very determined women and they will not get out of this easily! out of principle. I feel like they have stolen from me.
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