Macquarie Bank Screws up again

You may have seen my previous posts on Macquarie scew up with my Asia fund Macquarie Bank Asia redemption .. looks like Macquarie are trying to steal more money from customers.

Watch out for this dirty bank...

Macquarie admits to contract errors
By George Lekakis

May 29, 2008 03:00am

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MACQUARIE Bank is hoping it can grab thousands of dollars from up to 1000 borrowers set to refinance their home loans with rival lenders.

In an embarrassing move, Macquarie's mortgage arm has told borrowers that "errors" were made in the wording of their official loan contracts signed since 2005.

Macquarie has written to the affected customers in a bid to change contractual terms so that it can levy fees to recover mortgage insurance from borrowers about to refinance their loans.

Mortgage contracts seen by BusinessDaily show that Macquarie is not entitled to impose any mortgage insurance recovery fees if home loans are discharged within three years.

But Macquarie is now writing to borrowers to amend the terms of the contracts "in order to rectify the error".

Macquarie has been hit with a wave of refinancings in the past two months after it hiked rates on most of its home loan products above 10 per cent.

It is believed that customers with no-documentation loans have been particularly keen to refinance after Macquarie boosted its rates above 11 per cent for those products.

Macquarie spokeswoman Irene O'Brien confirmed that about 1000 borrowers had received correspondence amending the contracts.

"When clients take out loans with us they're told verbally that we will absorb their lender's mortgage insurance if they don't discharge the loan within three years," she said.

"These letters are a correction because this condition was not included in the loan agreements.

"It's not changing the contract because all we're doing is correcting something that was obviously an error."

But an irate former Macquarie customer told BusinessDaily yesterday that if the change was legally allowed it could cost him about $5000.

The borrower refinanced his loans with another bank last month, but was only notified by Macquarie of the changes to his old contract last week.

"It's as if they're trying to change terms and conditions to apply retrospectively," the former Macquarie client said.

If its only 1000 borrowers, then you would think they could absorb the cost to avoid a huge stink in the media about their contract tactics.

Especially so since the Government has been highlighting the dubious practice of high break fees without adequate disclosure on people desperately scrambling to achieve cheap credit.

You could argue that a verbal declaration of an unwritten clause by a sophisticated lender is inadequate - the old "red hand" requirement in contract law.

It also comes down to whether it was actually said to the borrowers and whether the omission is material.

But then again, who is going to take expensive legal action for such small amounts affecting so few people ?

Cheers,

Rob

I very much doubt they told each of their customers of this so called unwritten clause. And even if they did, you could argue that you didn't agree to it, hence it wasn't in the written contract.

Macquarie has many times screwed up, and I wonder how they can continue to operate with so many internal 'mistakes'. I wonder how many mistakes they have discovered in the clients favor, but I'm sure they wont admit to those.

Macquarie is a sinking ship, and I will say this will come out sooner or later and be reflected in their profits.

Nobody takes too much notice of fees and fine print in booming markets.

Just about any financial institution can appear a hero to investors at those times - even if its just by taking a bit more risk than the investor is aware of so the risk/return profile appears very healthy.

Its only during market corrections and recessions that people discover what they have really bought into, what level of risk and of course all the hidden little catches of getting out.

A lot of sophisticated people didn't read the small print on their broker margin loans. A lot of Government institutions bought US junk bonds.

So what about contracts that don't even include the small print at all ?????

Maybe this is a new business tactic.

Cheers,

Rob

Sounds like a case for the TV
I am sure ACA and TT will be interested

From my post on SS Somersoft Property Investment Forums - View Single Post - 0.6% rate rise for Macq. Loan


We're currently looking at our options re low-docs, break fees with Macquarie would be around $7.5k (plus the interest component)

Paying 10.6% on $200k and 10.28% on $332k low-docs

Nice to have some (now with rising rents) +CF locked in at 6.89%