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Purpose of Loan Declaration

Posted by on in Consumer Protection Disaster
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Was anybody asked to sign a Business Purpose Declaration (a statement that the loan was wholly or substantially for business purposes) with their loan application for purchase or refinance of their principle place of residence or for an investment property loan?

If so, what year was your loan taken out?

EDITOR:  Yes good question......

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  • doyla66
    doyla66 Thursday, 30 August 2012

    I would not know if I did. We had 2 business loans that were changed without our knowledge. The only documents I have obtained so far is a 2pg document 'Disclosure Statement' from Southshore Finance in West Perth. BTW: I would NOT recommend this firm to anyone. Mike is ex-NAB & his side-kick, Lou who sent the email we never saw (but obtained a copy via one of my FOS complaints) is ex-Bankwest!
    Is this document you query a variant of something else (read: dreamed up by banksters) or is it a legal requirement?

  • doyla66
    doyla66 Thursday, 30 August 2012

    Wow - thanks. Unregulated loans sounds interesting. I wonder if that has been used to cover investment property lending?

  • doyla66
    doyla66 Friday, 31 August 2012

    Yes lisa. I believe I have one. It was to build on an investment house on land that we already had. The purpose was to build and sell - just like all of the other loans we did. On the title was five people. We all had salary jobs. Three of us were involved in a hobby corner shop selling - "Fish and Chips", (The ABN for the shop was under the shop name), but by no means was our primary source of employment. The other two were never involved in the shop. The other was a nurse and the other one was on overseas working Australian citizen, but their primary address was not in Australia.

  • doyla66
    doyla66 Thursday, 30 August 2012

    Hi L,
    No it's not a variant of something else, but it has been used by mortgage brokers and banks to remove their responsibilities under the consumer credit protection laws. If a loan is declared for business purposes, then it becomes an unregulated loan. Getting a client to sign a BPD is most beneficial to lenders & brokers selling low doc loans, as they are relieved of their responsibility to verify the purpose of the loan, or it's suitability or affordability.

    There is an interesting paper here:

    http://www.consumeraction.org.au/downloads/CarolynBond-Howtosucceedinbusinesswithoutreallycomplying-March2003.pdf

    See item 2. How to avoid consumer legislation

    I'm curious as to how many of these loans out there have been declared business loans when in fact they are residential housing loans, whether it has been common practice for the banks to protect themselves by asking brokers to get these declarations from the borrowers. In my partners case, I have evidence that it was requested after the original application was lodged.

  • doyla66
    doyla66 Friday, 31 August 2012

    What a gem of a paper, Kate! Thanks!

  • doyla66
    doyla66 Thursday, 30 August 2012

    Hi Kate, I was lumbered with two loans from non-bank lenders and they are telling me to stop winging as these loans were not issued under the credit act as I have signed a declaration stating that the loan was for business purposes and not regulated by the Credit Act. My loans were issued one in March 2010 and one in Feb 2011. My argument is even if they think that they are covered by this document, on what grounds they issued these loans, as credit providers (lenders) and as credit assistance providers (brokers)they surely have to come under some sort of regulatory guide and they still need to adhere to rules and regulations to ensure they meet responsible lending obligations.
    If this is not the case they have an open invitation to commit all sorts of crimes under the authorities' nose and no one can touch them? How is it possible that a piece of paper gives them the right to mess up with our lives?
    Surely this is not right. If anyone can shed some light on how can we get around this declaration to shut them up would be greatly appreciated. What if we can show that they have not done their due diligence in ensuring that the borrower has the capability to repay the loan? Can they just issue a loan on the basis that we had assets even if we did not have sufficient income to repay the loan? My lenders cannot give me anything to prove on what they have based their opinion that I will be able to repay other than the fact that I had assets (my farm, which is my children's home) which now they want to sell to repay themselves.

  • doyla66
    doyla66 Thursday, 30 August 2012

    ROYAL COMMISSION into the lending practices

    Hi Kate,
    I went to the link you have posted in regards to how the lenders issue these loans and how they get away with "murder" Wow, I can read word for word what the lenders and the brokers are telling me. Can they be stopped? We need a Royal Commission to investigate these lenders who can get away with these horrendous crimes because the government is not closing the loop holes in the legislation. Please, Ms Gillard and Mr Abbot help us!! All we need is justice for our families and for other people who may not be aware of these things and will step in the same traps as we did. So for every Australian family's sake, we plead with you, put a stop to this rot so one else will have to suffer as we are at the moment.

  • doyla66
    doyla66 Friday, 31 August 2012

    I agree, Maria. It's got to be corruption if ASIC can't see this is in the public interest. If their definition is how many columns of self-promotion ASIC will get on the front page of a broadsheet, then that might have something to do with it. I can see the headline: Shame ASIC Shame!

  • doyla66
    doyla66 Thursday, 30 August 2012

    For so long I thought it was just me who was dumb and all this is my fault. This is what they did on my loan as well declared it for business purpose ???? plus they put rent down which I have NO idea who I was renting to. These criminals must be brought to justice and accounted for. I'm sick and tired of slick lawyers working for the banks who try and duck and weave out this. Karma or Denise will get them all in the end and lets hope Denise is there first then Karma

  • doyla66
    doyla66 Thursday, 30 August 2012

    Business purpose declarations can and have been set aside if it can be proved that the lender did or should have known that the loan was primarily for residential lending purposes. Investment property loans are now also covered under the same consumer protection laws. In this case it seems that the onus is on the lender/broker. It has also been argued that a person who signed under duress (such as out of fear of losing their home and needing the refinance) or who didn't fully understand the implications of what they were signing are deemed to be not at fault for their mistake.

    There is a link here to a research paper on the subject. Obviously someone sees it as a serious issue. It's a bit lengthy but I encourage you to read it. I truly believe it's valuable.

    http://www.consumer.vic.gov.au/library/publications/resources-and-education/research/business-purpose-declarations-and-the-limits-of-formal-states-of-purpose-2008.doc

  • doyla66
    doyla66 Thursday, 30 August 2012

    Just checked copy of LAF: It states; "IMPORTANT: You should not sign this declaration unless this loan is wholly or predominantly for business or investment purposes. By signing this declaration you may lose your protection under the Consumer Credit Code." Well, the 'wholly' document is contrived to facilitate a fraud upon the borrower & the broker was 'fully aware' that the loan was not (predominantly or otherwise) for business and/or investment purposes; signed without knowledge of this "disclaimer"; signed under duress of a refinance situation; broker failed to advise the consumer to seek independent legal advice (nor obtained such advise) prior to signing a "purported waiver" to critical Consumer Protection legislation pursuant to the Uniform Consumer Credit Code (Qld) (1994) sec. 70, superceded by the National Consumer Credit Protection Act (2009). It will be set aside premised on numerous issues!!!

  • doyla66
    doyla66 Thursday, 30 August 2012

    Good job Andy,
    Remember that you want to place the onus on the bank, or as you will see from my first link, the bank will attempt to deny liability due to the broker being 'your agent'. Unless of course you chose to pursue the broker.

    EDITOR: No point as Broker usually Broke.

  • doyla66
    doyla66 Thursday, 30 August 2012

    ahhh moment! The "invalid" LAF(1) purports to seek $506k(broker/bank crossed out $540k > no initial to witness) However, the actual loan sought at all material times was $472,500 (70%LVR). Hence the dumb bank actually doesn't hold any relevant LAF relating to the loan sought(without deviation to that fact). So did the broker forge my signature on a LAF(2)to fax to the bank? or did the bank simply approve a separate "individual" loan without seeking any formal application request, or simply cannot rely on ANY FORGED LAF(2)if one does indeed exists?

  • doyla66
    doyla66 Thursday, 30 August 2012

    Yes, 2006.

  • doyla66
    doyla66 Thursday, 30 August 2012

    Very interesting Andy. Our LAF also had an amount of $540,000 inserted / crossed out by the Bank or broker, then reduced to $442,000. Strange as we only asked to borrow $340,000 !!!
    After investigating further, we have since discovered that there are AT LEAST FOUR SETS of LOAN APPLICATIONs were done, we never saw any of them! (Commonwealth Bank)
    IMPORTANT NOTE : If the original amount was changed- then that is LAF number 1. If the amount was again changed - that is LAF number 2. If the amount was changed again -then that is LAF number 3. You have obviously never seen those previous LAFs as THE BANK HAS HIDDEN THEM from you!
    The bank tried this on us again when we re-financed in 2007. We changed our loan structure into:
    1) a $300,000 HOME LOAN & 2) a $75,000 LINE OF CREDIT. The CBA has tried to make out that there is ONLY 1 LAF for both loans, when in fact there are 2 LAFs! BEWARE OF THEIR DECEITFUL TRICKS!

  • doyla66
    doyla66 Saturday, 01 September 2012

    thx Wayne: stay in touch as we follow Storm BofQ Case commencing Mon Sept.10. .my barrister Anthony Morris of Queens Counsel > leading this Class Action (#300 Storm Victims) + testing High Court Case Law 1st time in QLD: so he will be very "tuned-up" when my brief arrives sometime (I hope never).website = Bank of QLD: Class Action (peruse great info already)

    RE: MY LAF(No.1)
    > my strong belief is there is only ever ONE x LAF(1) which stated originally loan sought 2 facilities when I wanted only one facility:-
    > $305k(facility-no.1) + $235k(fac-no.2) = $540k on page(4) of LAF(1)
    Then separate handwriting > (blatantly obvious: so no expert needed to say different unknown person to main handwriting of broker & not my handwriting which only signed - no content ever) > changed without initial the fac-no.2 amount from $235k to read $201,250.00 on page (4) of LAF(1).
    > but on page (6) LAF(1) re "Loan Table" it states as fac-no.2 = $201,000 flat
    (note: handwriting from broker i assume re this amount on page(6)LAF(1) but fac-no.2 on this page(6)never stated $235k, it was always $201k flat _ie: there is no alteration on page(6)LAF(!). .however it simply does not correlate with page(4)LAF(1)which shows an alteration (no initial) $235k > $201,250.00
    >What's happened is the broker was told to change amount of loan submission before faxing to bank & broker forgot to change page(4)LAF(1)from $235k>$201K & bank changed it after the broker faxing to bank?. . .MESSY STUFF!!!

    But page(6)LAF(1). . should have original fac no.(2) amount of $235k. . broker must have been on phone to bank half way thru completing LAF (after signing). . if u follow that?

    Point is Broker told me, MY Loan was last LOW DOC type of loan approved done altogether!!!
    So I think they just relied on this messy LAF to purport to approve a loan for $472,500 (=$305k(fac-no.1) + $167,500 fac-no.2). . .but there is NO SPECIFIC LAF that correlates to this approval, that my salient point. . .ie: the door for this style of loam had been shut. . so broker cannot re submit a 2nd LAF to be "CLEAN" etc!!!

    > The bank would have to "REJECT LAF(1) after improper(construction) recorded changes $540k > $506k(page6) or $506,250(page4)but didn't of course
    > But the bank never FORMALLY REJECTED LAF(1)that I signed + NEVER APPROVED LAF(1) in it's present form/construction either. .ie: loan = 4506,250/$506,000

    Conclusion:
    Bank appears to hold NO LAF (2) specific to and/or can be asserted by the bank to be rely upon for the purposes of the actual settled loan amount that relates to $472,500?
    ____________

  • doyla66
    doyla66 Friday, 31 August 2012

    Wayne, we have a similar thing. There are 2 loans, one PPR with equity facility & 1 investment property loan.
    ANZ provided through FOS only 1 LAF. Broker states though that there were 2 LAF's, though she also only provided me with a copy of 1. There appears to be no such thing as a straight answer in this game.

  • doyla66
    doyla66 Friday, 31 August 2012

    Yes. Mine is called a Residential Business Term Loan.

  • doyla66
    doyla66 Friday, 31 August 2012

    My purpose says - to build a residential property on existing land held.

  • doyla66
    doyla66 Friday, 31 August 2012

    Also please note in paper the reference to $60 an hour to search for Declaration etc.. OMG - Bank of Queensland does this!!
    Loan was done in 2008. Thanks so much for this - Barrister going to love it. This points out everyhting wrong with our contract.

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