Click on our Secret Library of Evidence ------>

    BANKILEAKS Secret Library

Loan Application Forms (LAF's)  

    Bank Emails to Brokers  

    Then Click on 'VIEW NOTEBOOK'

Join us on facebook

facebook3           facebook2 


What BFCSA Does...

BFCSA investigates fraud involving lenders, spruikers and financial planners worldwide.  Full Doc, Low Doc, No Doc loans, Lines of Credit and Buffer loans appear to be normal profit making financial products, however, these loans are set to implode within seven years.  For the past two decades, Ms Brailey, President of BFCSA (Inc), has been a tireless campaigner, championing the cause of older and low income people around the Globe who have fallen victim to banking and finance scams.  She has found that people of all ages are being targeted by Bankers offering faulty lending products. BFCSA warn that anyone who has signed up for one of these financial products, is in grave danger of losing their home.


Articles View Hits

Whistleblowers' Corner!

To all mortgage brokers, BDMs and loan approval officers! 
Pls Call Denise: 0401 642 344 

"Confidentiality is assured."

Cartoon Corner

Lighten your load today and "Laugh all the way to the bank!"

Denise Brailey

Led by award-winning consumer advocate Denise Brailey, BFCSA (Inc) are a group of people who are concerned about the appalling growth of Loan Fraud around the world. BFCSA (Inc) is a not for profit organisation in the spirit of global community concern and justice.

Click on the Cluster Map.

  • Home
    Home This is where you can find all the blog posts throughout the site.
  • Categories
    Categories Displays a list of categories from this blog.
  • Bloggers
    Bloggers Search for your favorite blogger from this site.
  • Login
    Login Login form

BFCSA: Unregulated Loans according to Gadens and Denovan 2006. Bad Bankers simply reclassified loans!

  • Font size: Larger Smaller
  • Hits: 1165
  • Print

Unregulated loans riskier than UCCC loans?
by Jon Denovan

October 2006

Many lenders go to significant trouble to ensure the loans they make are not regulated by the UCCC.  But does this make the loan safer?  I've generally come to the conclusion that unregulated loans secured over the borrower's principal place of residence are often riskier than regulated loans.

The starting point in reaching this conclusion is that all loan contracts are subject to review on the basis that they are unconscionable.  That's true for both regulated and unregulated loans.  Once a court or tribunal varies or annuls a loan contract because it's unconscionable, the mortgage securing that credit contract and any guarantee are similarly affected.

Many credit officers focus on s 70(1)(l) of the UCCC – the so-called "Exocet missile".  The section got this nick name because it was initially considered a very dangerous concept for lenders.  It stated that one (and importantly only one) of the matters a court can take into consideration in determining whether a contract is unconscionable, is whether the lender knew or could have found out by reasonable enquiry of the borrower, that the borrower could not make the repayments or could not make them without substantial hardship.

However, there is ample court authority that the ability to repay is also taken into account in determining whether an unregulated loan is unjust.  There are several decisions making it clear that lenders who make loans to unsophisticated individual borrowers relying solely on the security are likely to encounter problems.

Against that background, it's easy to see that the greatest hardship is likely to be inflicted on borrowers who stand to lose their principal place of residence if the mortgage is enforced.  If the money has been lent to assist purchasing the property or for living expenses, so long as the lender did not act recklessly, it is more likely than not that the court will not interfere with the commercial bargain. However, if the money has been lent for business purposes, particularly business purposes that were risky, or where the borrower was likely to have been influenced by advisors or relations, then it is quite likely the court will act to protect the borrower's home.


At the end of the day, courts and tribunals are trying to ensure that there are fair business dealings and that borrowers are not "ripped off".  The chance of being ripped off is much higher where the principal place of residence is put at risk for speculative purposes and the lender did not make proper enquiries as to the ability of the borrower to repay and failed to enquire whether the borrower was acting sensibly.  Accordingly, lenders who go to some trouble to classify loans secured by the principal place of residence is unregulated, are probably putting themselves in harm's way rather than improving their position.

Last modified on
Rate this blog entry:


  • No comments made yet. Be the first to submit a comment

Leave your comment

Guest Wednesday, 12 August 2020