According to the Australian Financial Review, accusation, a couple in Victoria, failed to correctly assess its loan application, grossly undervaluing its living expenses by as much as A $6570 a month. The couple lost heavily on property investments in Darwin and Mudgee.
Maurice Blackburn, a law firm, is understood to have filed a class-action lawsuit against Westbank, and the couple are one of the main litigants.
The lawsuit information provided by the law firm shows that the bank relies too much on the industry assessment benchmark when evaluating customer loan applications, rather than on the basis of actual customer expenditure.
At present, Western Pacific Bank is Australia`s second largest mortgage bank.
Loss of 430000
In 2013, the couple bought a one-bedroom apartment as an investment property in Darwin`s CBD area for 540000 Australian dollars, according to court documents. The payment method is based on the interest-only loan of the Bank of Western Pacific.
But we know what happened next. Darwin`s housing prices, which peaked in May 2014, have fallen to 2007 levels.
The couple also halved the price of their original investment home, losing nearly 50% from the purchase price. As five years of interest payments expired and were unable to transfer loans, the couple had to sell at a loss because they could not afford the monthly payment after the loan transfer.
At first, the couple applied for a loan from the Bank of Western Pacific through a loan broker, reporting a monthly living expenses of A $3000 a month. Western Pacific Bank, on the other hand, relies on the household spending indicator (HEM), a common indicator, to assess the couple`s monthly living expenses of A $3230.
However, the couple`s loan information included a bank flow. The bank`s running water is also key evidence that actual average monthly spending is close to A $9800.
In less than a year, the couple again used Bank of the Pacific`s interest-only loan to buy another investment house for A $620000. This time it is located in the Mudgee area of the new state. However, this loan approval, Ethernet Bank is still based on the HEM standard.
The couple lost A $430000 on two investments.
The bank is not wronged!
Lawer, who represents the class action, said Western Pacific Bank should verify the real living expenses of households and their ability to repay principal plus interest, not just interest.
Lawer argues that banks should reject the two loan applications because if calculated correctly, the bank should have been able to find that the couple had a loan repayment gap of more than A $100000 a year.
The judge in charge of the class action is Nye Perram.. The latter is also in charge of a lawsuit filed by the Australian Securities and Investment Commission (ASIC) against Western Pacific Bank for breach of responsible loans.
At present, the class action is open to anyone who has been at Bank of the West Pacific or its subsidiary, St. George`s Bank, since 2011. Customers who have made mortgage loans and suffered irresponsible loan losses can be involved by Melbourne Bank and South Australia Bank.
In response to the case, some netizens "avenged" the bank for the West Pacific Bank, saying that the couple blamed the bank for losing money and did not see the bank when they were profitable.
However, some netizens believe that, as a bank, in order to make money does not comply with the "responsible credit" regulations and internal risk control standards, this prosecute lawsuit is actually "not wronged"!
