Bank made loan mistake

[Atheum]

Had a fun conversation with bank manager today.

Got pre-approved for X amount a while back for investment property from bank, moved over existing mortgage to new bank, they even offered to pay half my break fees on purchase of new property.
Started house hunting, had plenty of contact with manager for 6 weeks.
Got an email from bank saying our manager was changing, which was annoying as we had a lot of correspondence with old bank manger and was a pain starting over.
In steps new manager, had a meeting and reconfirmed everything, all good.
Found a house and had it approved by bank.
Won the house at auction for great price, all good.
One week out from settlement, got a call from new manager today to tell us that she had being going over the details of finance and our old manager had made a mistake, and we are 50k short to buy the house, and we will have to find another this money by next Friday.
And on top of that, old manger wasn't cleared to offer to pay half of our break fees, so we wont get that either.

I went through all the email and correspondence, even the approval letter and forwarded to new manager to confirm what we had been offered.
New manager 100% agreed with me and said it has nothing to do with us, it is completely old managers fault, but unfortunately there is nothing they can do about it as they are bound by lending rules.

Not sure how much I should push it with them or what I can realistically achieve? as I know that pre-approvals etc are indicative and the bank can change them, but this is on another level!
Specially 1 week from settlement

[Bob Kane]

As the old bank manager made the mistake, I would expect the bank to lend you the $50k extra that is needed.
But sometimes banks win even when they shouldn't.

[Nick G]

The new manager is being lazy and he needs to go fight for this. Pre approvals are good until Oct 1 per the RBNZ. If it were me I'd get a broker in there at 9am who knows that bank and I'd also start to look at official channels down which you can escalate this and lodge an official complaint. Keep all correspondence.

[Momo]

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Tell the new bank manager if they don't get this sorted, you will file complain to Banking Ombudsman , this will sure help. Bank doesn't like to go down to that road especially it is their fault to mix things up.

Ombudsman Scheme investigates and resolves disputes between customers and their banks. They are independent of scheme participants, customers, and government. Their service is free of charge and easy to use.

Freephone: 0800 805 950
Telephone: 0064 4 915 0400 (from overseas)

[Keys]

Include the notation that any financial fallout attributed to their mistake will be claimed against them.

[Rosco]

, but unfortunately there is nothing they can do about it as they are bound by lending rules.

I would try to fight on this part.

I presume you are looking at normal lending and 80% LVR on personal house.

Why that is the main rule, the bank is allowed to lend a certain % of clients (I think it is 5%?), over the 80% threshold and still meet their RBNZ requirements. So as the bank made the mistake (its the bank mistakes and not a specific persons) they need to make you one of the borrowers over 80% in this month or period.

That should allow you to borrow at least $50k more and fix your immediate problem.

Ross

[Viking]

You should also make the point that should the deal fall over that you will hold the bank liable for the financial consequences.

[Lanthanide]

I assume the Consumer Guarantees Act also applies to housing loans.

While you ultimately might have trouble getting the deal you want from the bank, if the CGA applies, they are liable for any consequential loss that you might suffer as a result of their actions.

[Ivan McIntosh]

The Banking Ombudsman is a good, but too long term, method of dealing with this (if you cannot get satisfaction directly). You have substantially changed your position in reliance on their representations and the Bank really does need to come to the party. Because you need your funds soon, I would recommend your lawyer go into bat directly and quite aggressively using the Fair Trading Act, Consumer Guarantees Act if applicable, and general law on estoppel, misrepresentation etc. Did an article on this once...most pre-approvals include language that make them not worth the paper they are written on, if it weren't for the law of equity and consumer protection legislation. I have seen banks fight very hard to reject the promises in their own emails, blaming individual employees as not having had the authority to say on the bank's behalf what they did.