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NSW Can Bank Stop Sale of Property Covered by Mortgage Insurance?

Discussion in 'Property Law Forum' started by Tania L, 13 November 2015.

  1. Tania L

    Tania L Member

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    I have a property where land price has been halved in recent years. I have done my utmost to sell the property for the best price possible due to current market demand. I have been in financial hardship since the QLD floods in 2013 (I live in NSW, property in rural QLD).

    I'm single mum with no income and a house that is inhabitable. I have not been able to maintain rates and local council looking at recovery action. The case has been with FOS for 3 years due to a valuation dispute yet the bank still charging interest throughout. The bank is stating that will not accept the current offer, but the property is under mortgage insurance. The offer was $80,000, and my current debt is $227,000. (However $38,000 interest has been added since I had a FOS case opened and the bank is refusing to speak to me despite my legal requests for mediation).

    Council will sell for $46,500 but the bank has stated that they will not accept anything under $108,000. Can they stop the contract? They don't lose, they are covered under the mortgage insurance.

    The last property to sell in the area was April 2013, and current market properties have been on the market for 72 weeks plus. The bank is rating the property valuation higher than $108,000 and will not release titles. Can they do this? I have had 10 case managers since the 18th Sept and am getting no straight answers from the bank.

    So I guess questions is:
    1. How can the bank prevent the sale of a property when the property is covered by mortgage insurance agreement under property law and when there is no clause in a contract between seller and buyer giving authority to do so?

    Would really appreciate any insights or means of enquiry.

    Many thanks
     
  2. James D. Ford - Solicitor

    James D. Ford - Solicitor Well-Known Member

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    Hi Tania,

    Please be aware that whilst the Bank might be covered by Mortgage Insurance, you are not - even though you paid for the Mortgage Insurance.

    If the Mortgage Insurer has to pay the Bank any money... They may then turnaround and sue you to recover their money.

    I assume you are not aware of this...

    It is a terrible situation.. but the higher the price the Property is sold for.. The better for you.. as the less you will be liable to pay to the Mortgage Insurer.

    What is the current status of the FOS valuation dispute? It has been 3 years, what is the hold up...

    Kind regards
     

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