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05-12-2007 - MORTGAGE LEMONS |
MORTGAGE LEMONS
How Australia's battlers get squeezed.
Telling the world that the home failed to sell at auction.
by Neil Jenman Reproduced with permission from www.jenman.com.au
On the morning of April 2 this year, in a quiet street in the Sydney suburb of Carlingford, a family received a knock on their door. It was the Sheriff and a locksmith.
The family was one of at least a dozen families who are kicked out of their homes every day - and that's just in New South Wales. Across the nation thousands of families are now battling to keep their homes.
Here's how some are being treated.
The owners of the Carlingford home were Craig and Sue Hanson. Craig is a service technician and Sue is a carer of elderly people.
Eviction day also happened to be Craig's birthday. He was 58.
About 18 months earlier - in October 2005 - Craig wanted to refinance his home to expand his service business. He approached a local mortgage broker, John Foley of Combined Asset Finance.
Foley arranged a loan through a firm called Lawteal Finance Pty Ltd. By the time their ANZ home loan of $270,000 was paid out and all the fees were deducted - including $1,100.00 for Foley, a brokerage fee of $3,740.00 and $5,012.00 for Lawteal's law firm, Kremnitzer & Co of Double Bay - Craig and Sue received a shade under $90,000. They now owed close to $400,000.
Within a few months, Craig and Sue were battling to make payments. Craig's business dream had become a living nightmare.
And so, inevitably, they lost their family home.
At least they still had some equity in their home. Or so they believed. Another bank had given them a 'drive-by-valuation' of around $590,000.
As they moved into a local motel, Craig and Sue were hoping to salvage around $150,000 from the financial mess that had become their lives. But the carnage was far from over.
It took more than five months for their home to go to auction. And even then, on September 15, the home was passed-in. The agent couldn't find a single buyer.
Now, to be sure, the home is not the most desirable. Even though it has six bedrooms, there is an enormous power pylon in the garden and it backs on to a cemetery. It also has the street number of thirteen.
But every home has a price and every agent knows that the better a home is presented, the better the price is likely to be.
Putting a sign on a home with the headline "UNDER INSTRUCTIONS FROM THE MORTGAGEE" is not just humiliating for Craig and Sue, it attracts bargain hunters.
But, after the failed auction, to leave the sign at the front of the home is to say to the world, "This home failed to sell at auction on September 15." Every day that passes, the property looks worse and worse. And, of course, the price goes lower and lower. The home becomes a 'mortgage lemon'.
As the real estate agent, Anthony Drivas of Carlingford First National, told a caller last week, "The banks don't care about the price." Oops, shouldn't say things like that, you know (especially when the caller was a Jenman arranged 'mystery-shopper').
Later we called Drivas to ask him something else about the home. Something that had been distressing Craig and Sue: since the auction (now more than two months ago) the home
The putrid pool filled with tadpoles.
has, in their words, "been left to rot".
The grass is overgrown, the pot plants have died, there is a wrecked car in the garden, dust and grime is everywhere and the once-gorgeous swimming pool is putrid green and filled with tadpoles.
So tell us Mr Agent, why is the home in such appalling condition?
Anthony Drivas says it's not his fault. [He would say that, wouldn't he?]. Drivas says he has been asking for the home to be cleaned up. He invited us to his office to view an email confirming such, but then, on Monday, changed his mind and warned us to "be careful". Something about speaking with his lawyer.
Drivas also said he had been terminated as the agent on October 16. When asked why his sign was still on the property or why he was still discussing it with buyers, he warned us again about his lawyer.
Ah yes, the lawyers. Let's protect each other. Go away Jenman and stop asking annoying questions.
Let's look after the lender, the lender's lawyers, the broker, the agent and everyone else we can think of - everyone that is except Craig and Sue, the battlers who once owned the home.
Yesterday, Sue acknowledged that most of their equity has probably been blown because of the long delay and the filthy condition of their once loved home.
At one stage, Sue said the stress had driven her to consider suicide. Today, thanks to the kindness of a friend, Craig and Sue are living in a small apartment on the Gold Coast. They are looking for work and trying to get their lives back together.
Meanwhile, the grass at their former (and still unsold) home grows longer, the tadpoles get fatter and their equity gets thinner.
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