Stop Greedy Loan Sharks feeding off Small businesses

Stop Greedy Loan Sharks feeding off Small businesses

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Michelle Coleman started this petition to Hon Mr Kenneth Hayne AC QC and

Need to stop greedy loan sharks & lawyers targeting small businesses and consumers by lending them money banking on that they will default so they can take all of the equity through "default interest" and "legal costs".

These lenders have seen the gap in the law and taken full advantage of the veil of the consumer credit code that leaves small businesses & some individuals open to have everything taken from them legally.

The Non-Code Lending world, which has evolved as it has a larger scope to lend money to borrowers that aren’t protected by the Consumer Credit Code. They abuse it by charging large mandate fees with the intention of never getting clients a loan; to taking all of borrower’s equity or profit by charging extravagant default fees & interest that eats away any equity or money that you have. These are the lenders that offer short term, 2nd mortgages, caveat and/or asset lending with high interest rates but even worse is that they want more.

I want to share my story to show you the scale of what these lenders can get away with…

I was a very successful residential investment mortgage broker and had a good reputation and helped client’s structure & accelerate their investment property portfolios. I moved into property development with my business partner, who was once of my mortgage clients many years before.

We had gone into property development as we were seeing too many clients get ripped off with the investment educators. We brought together private investors for each project, in addition to having our own funds - we had skin in the game too. We have/had very good projects with one 98% completed, and 2 nearly ready to start construction. It was already hard enough being a woman in the banking industry, then property development brings its own challenges but we were pushing through, but now these sharks take the greedy cake.

They don’t discriminate on gender, or race or anything. They just want to leave you with nothing! And because getting access to legal opinions and representations is so costly, the legal system is ultimately flawed as its now out of reach. They know you can’t protect yourself and get legal advice or act because you don’t have the money & it costs too much – just like big bullies in the school yard. (Another important cause that I will pursue is to enable each person the right to get legal advice to find out where you stand, make lawyers back themselves and only get paid or on a scale based on their result)

As it stands now, I will lose everything that I have built on my own over the last 10 years. I had put my own funds, used my own security in the developments and not just other people’s money so I was completely invested in completing these projects.

I knew the risks and accepted the high interest rate of 30%pa when I with my business partner took out a 2nd mortgage across 3 of our properties to assist cash flow to the projects from First Mortgage Capital Ltd.

The loan was for $628,000 which we received $500,000 net after prepaying the interest for 6 months.

6 months came around very fast with all that was going on, my business partners father had been ill and sadly passed away in June 2019, right around the time the loan was due.

The loan expired on the 4th June 2019, with the lender issuing Notice of Default on the 8th July 2019...

The lender took possession of the 3 properties and fast tracked the block of land to be auctioned on the 14th September.

BUT the fun thing is that under the current system, they don’t have to take you to court to get possession or even advise you or communicate what is happening.  We found out through our builder driving past the block and saw the FOR-SALE sign.

We were distraught, we had been working with brokers and lenders trying to get finance sorted but things were taking too long, we had delays with my business partner grieving the loss of her father (she had lost her mother & brother in the 12 months previous, we thought we had time as we hadn’t heard from the lender or their solicitor. Big Lessons learned.

No lawyers would help or give advice unless we could pay a large upfront deposit or told me I couldn’t afford them & they would refer me to a lower priced, but nearly as good law firm.  It seemed like we had no chance of getting any legal help, but I am hoping that we will get our own Pretty Woman moment when we are successful in this campaign & case, and we can just let them know “BIG MISTAKE”.

My business partner & I are fighters and refused to go down without kicking & screaming and we compiled an urgent injunction application before the Supreme court to try and stop the auction.  So, there I was with my 3 young children watching on as I desperately & dismally stood before the Supreme Court judge on a Friday night, losing the fight to stop the auction.

It was my lowest point; I cried all the way home. My beautiful kids came to me & reassured me that everything would be okay & gave me their saved “tooth fairy” money. At least I had done something right.

We had no hope of refinancing and they knew that – that’s what they wanted.  The original loan was assessed based on the asset value & the exit strategy of refinance. They accepted the valuation estimates we had given of time of application; so no valuations were done. This makes it very hard to refinance 6 months later. We had estimated $2.9m, it sold for $2.35m.  We were doomed before we started. We could never have refinanced it as the valuation with a new lender would never have come in to what was needed to enable that.  The market certainly didn't drop in that time-frame.

We had been in communication from June updating them on our refinance options, and we weren’t given the proper time to get a formal offer. We had the first offer does not proceed as we received low valuations. Then we had to start again to find another lender, and around we go again.

One good thing was the property was passed in on auction day, and during that time we did try to organise extensions before they sold it by private sale on the 30/9/19.

But wait, here is the kicker, even though I disagree with the sale as a whole, the difference between the sale price and what the first mortgagee balance owing, it was enough to pay what we owed plus surplus which would equate to approx. 70%pa interest already – BUT they wanted more.

With the sale they had agreed to a 6 MONTH SETTLEMENT with the new purchaser, even though they wouldn’t give us 2 weeks to get loans finalised.

I am being charged 60%pa for the next 6 months and the only way now to cover that is to continue to repossess & mortgagee sale the other 2 securities

PLUS, to rub salt in the wound, they had spare money to pay out the first mortgagee to add to the debt – so without my knowledge they paid $1.55million to pay out my first lender.

The lenders & lawyers will not communicate with me or reply to any emails as I don’t have any right to information about this loan or the properties apparently. I don’t have a statement or payout but a letter saying that my $628,000 loan is now $2,600,000 in an 8-month default period

And you think it couldn’t get any worse, but because I live in the next street to the block of land. (I had moved so I could get the kids into the school) I drove past the block – even though the settlement is not due to settle until 30th March 2020 – THEY HAVE COMMENCED WORKS ON THE PROPERTY. How is this fair, right or legal to do whatever they want to extract every single ounce of equity and ultimately my kid’s future through disgusting default rates, unfair loan terms, unreasonable settlements conditions for a mortgagee sale.

I don’t have legal counsel to help me with this as they all want a large upfront deposit and have indicated that the cost will be substantial.  But they haven’t even looked at the facts of the case, the documents and evidence I have collated but only assume that I can’t afford it.

This is how this behaviour can thrive without or very little repercussions. People simply can’t protect themselves and their legal position.

So, we need to get the laws changed so this type of lending is stopped. Small business & non code loans deserve the same amount of protection to a certain extent. Whilst being non code loans have their advantages, the gap needs to be plugged where lenders and their legal representatives can extort as much as they want from the client.

Below is a summary of what I propose.

1.      3-month extension to sort our finances, if you can prove you are in contact with, you’re a lender and are actively working on the refinance/payout strategy

2.      That mandates and upfront fees are either refunded if not able to get finance apart from a smaller capped admin fee to cover costs. Some of these are at least 1%-2% of the loan amount so it makes it hard to get finance if you must keep paying these fees

3.      Clients always receive a copy of their valuation if they have paid for it, but they can sign a form to acknowledge it won’t be used for another lender, or purposed unless they pay an assignment fee and/or the first lender is unable to help

4.      That default or penalty interest is capped at a max rate of 2% to 4% pa above the loan a rate for all loans (code or non-code)

5.      That the default interest is only charged while your loan repayments/loan is in arrears so once the property is repossessed then the default interest stops.

6.      That the lender always communicates with the borrower the status of what is happening & provide information when requested.

7.      That there should be a process that notifies the borrower that it will be going on the market and other key milestones

8.      That when the property is settled that a settlement statement is provided 24 hours

9.      Mortgagors should be given the equitable right to redeem their mortgage and their property up until 48 hours before the property is settled to another buyer.

10.  The settlement terms of the mortgagee sale can be at the lenders discretion to obtain the new sale but the charge to the mortgagor can only be 30 days at the default rate.

These lenders will claim that this is their cost to do business because they take on extra risk, but that’s what they want, to take on this perceived risk when in fact they are in the best position as normally the LVR'S will allow them to always get their money back plus a big fat interest pay check.

I am in all favour for private funders to make money, but not when they are setting us up to fail and take all they can regardless of the outcome to others.

I know I am not the only one in this position, there must be others, but there is very little help that is specific for small businesses. There is a large gap which I hope with this petition it will create awareness, enabling others to speak up & together we can get the information to help others cope with the stressful situation of financial difficulty and ultimately stop these unscrupulous lending preying on the vulnerable borrowers.

I am continuing the fight with a crowd funding campaign to assist with our legal fees to fight the lender, stop the settlement if possible and/or be compensated for the loss and the emotional/mental stress that it has caused.

If you can please support this petition by signing where promoted; PLUS, if it’s possible please help support our crowd funding campaign. We are raising funds to assist with our legal fees to fight back, get some initial legal advice and hopefully expose the lender, stop the settlement if possible and/or be compensated for the loss and the emotional/mental stress that it has caused.

I know I am not the only one in this position, there must be others. When I started to research to find out what we should do, it was daunting and stressful as there is very little help that is specific for small businesses. If you fall into outside of the Consumer Credit Code, you are very exposed. Whilst in recent times this situation has been recognized and there has been improvement; there needs to be more done, and swiftly.

I need to stop or delay the settlement of my property to give me any chance of getting mine and my investors’ money back- Settlement is March 30. I need to be given a chance to have a say & protect my children’s future.

 I hope with this petition it will create awareness, enabling others to speak up & together we can get the information to help others cope with the stressful situation of financial difficulty and ultimately stop these unscrupulous lending preying on the vulnerable borrowers. And ultimately & most importantly I want to show my kids that if you don’t give up and keep on pushing on you will come out on top. Keep up the pressure for what you want & no matter how much you feel you are sinking just fake it till you make it. We need to believe that justice will prevail and doing the right thing does make a difference.

Thank you for taking the time to read this & your support.

 

0 have signed. Let’s get to 200!
At 200 signatures, this petition is more likely to be featured in recommendations!