Since the Global Financial Crisis, the Litigation Team at Atkinson Vinden have assisted high net worth individuals negotiate with lenders regarding existing loans during the turbulent economic climate for business.
Individuals experiencing temporary difficulties in servicing existing loans, either for private purposes or for their businesses, should consider a number of options open to them as follows:
- Negotiate with the lender. Most lenders offer a range of flexible payments in the event that your business is suffering from a temporary blip, which you anticipate recovering from in the near future.
- Internal dispute resolution. Lenders are required to offer internal dispute resolution in the event that individuals are experiencing difficulties in meeting repayments.
- External dispute resolution. Lenders are required to be a member of an External Dispute Resolution scheme. The two current options for lenders are the Financial Ombudsman Service (FOS) and the Credit Ombudsman Service Ltd (COSL). These services provide a forum for individuals experiencing difficulties in meeting their repayments to negotiate with lenders.
- Refinancing with an alternative lender.
- If the loan is secured by real property, an individual should consider the option of selling the property in the event that they are likely to experience ongoing difficulties in servicing the loan.
We are available to assist individuals and businesses consider the best approach for them if they are experiencing difficulties meeting their loan repayments. Early negotiations with the lender can avoid or resolve possession proceedings commenced by the lender in the Supreme Court of New South Wales.
When an individual or business is served with a Statement of Claim for the possession of a property securing a loan in default, the borrower has numerous options if they seek advice promptly, presumably within 28 days of being served with the lender’s claim. Our team are available to answer questions regarding private mortgages, business loans and loans under the National Credit Code.
We are closely following amendments to legislation on the provision of credit. The Consumer Credit and Corporations Legislation Amendment (Enhancements) Bill 2011 (Cth) (the Bill) was introduced to Parliament on 21 September 2010. The Bill is being considered by the Parliamentary Joint Committee on Corporations and Financial Services and the Senate Economics Legislation Committee who have been consulting with lenders, external dispute resolution services, lawyers and community legal services who provide feedback on behalf of low income borrowers. Submissions on the Bill closed on 7 May 2012.
The Bill proposes changes to:
- Strengthen legal requirements for reverse mortgages;
- Hardship Applications under the National Credit Code;
- Caps on the maximum costs payable regarding small loans;
- Restrict the use of some terms, such as “pre-approved”, “independent”, “impartial” and “unbiased”;
- Enhance the Court’s ability to address unfair or dishonest conduct by brokers;
- New provisions to allow borrowers to claim a refund for excessive establishment fees levied by lenders for third parties, such as finance brokers, which are not ascertainable at the time of payment; and
- Changes to disclosure requirements regarding employer payment authorisations.
New Equity List Practice
A further recent change which affects unregistered mortgages disputed in the Supreme Court of New South Wales Equity List is the new Practice Note issued by Her Honour Chief Justice Bergin relating to the service of evidence and the process of discovery. This impacts both lenders and borrowers in disputes regarding mortgages because the Court has adopted a streamlined approach for the parties to prepare the case for hearing.
For more information or assistance with any of the above issues, please contact the Litigation and Dispute Resolution Team at Atkinson Vinden.