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Security Swap question for Bankers / Mortgage Brokers (In relation to CCCFA)

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  • Security Swap question for Bankers / Mortgage Brokers (In relation to CCCFA)

    I am in the process of doing a security exchange with a bank.
    Swapping one unencumbered property for a property that my bank has security over.

    Once that swap is done, I can sell the property they currently have, and reduce debt by about 1m with a different bank.

    In the past you would not expect to have to do an application with full financial disclosure to do that.
    The banks are now trying to say that I have to do this due to their responsibilities under the CCCFA.

    I think they are just covering their buts due to not actually understanding the Act.
    Under the CCCFA the lender must take steps to ensure that a "borrower does not commit themselves to a new loan" that would cause the borrower financial hardship.

    A security exchange is NOT new lending, and therefore my reasoning is that an application form is not required.
    In fact, due to my wish to reduce future borrowings, the bank by creating potential obstacles to reducing my overall lending, is actually breaching the act.

    What do the experts think on this ?
    Anything to add ?

  • #2
    You are a victim of the ridiculous new CCCFA rules in place. It's not the bank being difficult. Any change of structure triggers a completely new application. Sorry!
    Financial Paramedics


    • #3
      I have yet to find that subsection of the act.

      All I can see is a breach of the act by them, if they dont let me do it.

      We have to be careful with incorrect intepretation of the act by banks being careful, versus what the act actually says and whats its intention is, as described in the act itself.

      I will keep reading it, but if you happen to know the exact section that you are refering too, can you let me know.

      Cheers Paul


      • #4
        Okay so I just had a good read through the Act, and its not actually that bad.
        The issue is the banks are scared to make a mistake and be hammered if something goes wrong, and are actually ilegally working against the act, gone over the top on many things.

        I think all Mortgage brokers should get legal advice and have their inhouse solicitors actually read the act.
        As banks must abide by the rules of the act and not just pick and choose what they want to apply, I think brokers should hold them to account on some things, I am going to anyway.

        It is no excuse for the banks to not understand the act and just request applications for every minor change just to cover their responsibilities.
        And say box ticked.

        They cant just say "the act" requires it.
        The need to specify what part of the act.

        The banks need to understand the act and operate correctly under this legislation.
        And also the banks need to remember the actual purpose of the act is to "protect the interests of consumers" and the emphathis in the act is on full disclosure of the bank to the consumer, not the other way around.

        I would be interested Brokerman if any of the larger brokers such as Mike Pero etc have actually had a hard look at the act, through their lawyers.


        • #5
          Happy to talk this through as it's a major in the industry with first home buyers effectively locked out unless they have 20% deposit.

          A structure/restructure/entity change triggers a full assessment which is b*ll*x, as is a small topup. The Act is badly worded and was not designed to impact on mortgages. Of course the lending sharks will sit up and take note in the same way the gangs handed in their guns.

          Non banks have a different view and that's my pond and happy to say it's growing rapidly!

          Financial Paramedics


          • #6

            I am actually looking at 2 security swaps, and are trying it with 3 of the main banks.

            I wont say which banks they are but:

            1. First Bank did not bat an eye lid and asked my solcitor to email their security release team (and they would review the quality of the new security).

            2. Bank Two asked me to submit an application due to CCCFA rules 1/12 and I told them I didnt need to as the CCCFA didnt require me to - and they said fine.

            3. Bank Three have just said the same as bank two.

            So going back to bank three I want to buff up my argument a little bit more better with facts and data, as I like the bank manager, rather than just tell them roughly like I did with Bank Two.

            I thought all buyers were already locked out unless they had a 20% deposit - with the main trading banks and most of the big non bank lenders.


            • #7
              CCCFA plays a part with FHB's however the main culprit is RBNZ, perfect storm!

              Good luck with the swap, as you say the banks are running shy and common sense is out of the window. Be interesting to see where it all ends up.

              Off for dinner!

              Financial Paramedics