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MFAA Prosper : Mortgage and Finance Brief 06
B orrowers frequently assess their mortgage and, in this instance, the borrowers thought the interest rate on their existing home loan was too high and wanted to take out a loan with a lower interest rate. Their first move was to approach their existing lender to see what they could offer them, but they could not come up with a satisfactory interest rate so they approached another lender, who offered a loan with a more favourable rate. The borrowers alleged that they first provided their existing lender with a request to discharge their loan in December. Settlement, however, did not occur until June, some 24 weeks later; and this was despite repeated follow-ups by the new lender, the new lender’s solicitor and the borrowers themselves. In settlement of their complaint, the borrowers sought to be compensated for the difference in the interest they paid on the existing loan, and the interest they would have paid on the new loan, for a period of 18 weeks (the borrowers allowed si x weeks for settlement). Referring the response The first stage of the Credit Ombudsman Service (“COSL”) process is to send the complaint to the member to provide them with an opportunity to respond to the complaint. December to June seemed like a long time for a discharge to be processed, and we requested an explanation from the existing lender. We suggested that the existing lender provide us with a copy of any correspondence from the borrowers and their file notes to support their explanation. The existing lender denied receiving the borrowers’ request to discharge the loan until Februar y, 18 weeks before settlement. The existing lender provided us with a copy of the discharge request, and the date next to the borrowers’ signatures on the discharge confirmed this. The existing lender also informed us that they were in continuous discussions with the borrowers about lowering the interest rate on their existing loan. The lender claimed that it was not until April that the borrowers confirmed that they wished to proceed with the refinance and that, even then, there was no indication that it needed to be done urgently. The existing lender provided us with their file notes to confirm this. The existing lender’s response was provided to the borrowers. After making enquiries of the new lender, the borrowers conceded that the formal discharge request was not provided to the existing lender until February. However, the borrowers insisted that they were never interested in remaining with the existing lender and that the new lender, their solicitor and the borrowers themselves had repeatedly requested the existing lender to discharge the loan. Contested information After reviewing the available information, in relation to the events occurring after February, each party’s version of events is neither: 1. consistent with the other party’s version of those events; nor 2. supported by documentation or other collaborating evidence. Where conflicting statements are made by the parties, we consider: 1. the information provided by each of them; 2. whether the conduct of the parties was consistent with the version of events they say occurred; 3. whether we can otherwise draw inferences as to the facts of the matter (because we cannot cross examine the parties on the statements or documents they have provided); and 4. what is more likely to have occurred, having regard to the information available to us. The existing lender’s file notes indicated that they had contacted the borrowers with offers of reduced interest rates. However, it wasn’t clear from the file notes that the borrowers may have been interested in reconsidering their decision to refinance. Following our discussions w ith the existing lender, they agreed, as a gesture of goodwill, to compensate the borrower for interest they would not have paid had the loan been refinanced si x weeks after the discharge request was received in February. After further negotiations, the parties also agreed on the interest rates to be used for calculating the amount of compensation. The COSL (Credit Ombudsman Service Limited) is an impartial dispute resolution scheme that gives consumers a chance to complain, and members a fair hearing. For more information about the COSL, or to become a member, log-on to www.cosl.com .au When borrowers switch mortgage providers, the relatively swift discharge of their current loan is required for the new agreement to take effect. But what happens when the discharge takes longer than it should? Crossed wires 1Keep a copy of all correspondence. Copies can be easily stored electronically and retrieved. 2Keep detailed file notes of all conversations with your clients. 3Confirm important information in writing, particularly instructions you receive from your clients or instructions you give to your clients. TIPS for MFAA members 3 Mor tgage & Finance brief | 57 Legal - COSL
Mortgage and Finance Brief 05
Mortgage and Finance Brief 07