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Mortgage lender fails to act ‘responsibly’

by Staff Reporter7 minute read

By: Belinda Luc

A mortgage provider has been found guilty of ‘unconscionable conduct’ by the Supreme Court of Victoria after it failed to do proper income checks on a customer.

Violet Home Loans was found by Justice Forrest to have submitted loan applications to Perpetual that indicated the customer earned between $69,000 and $75,000, when in actuality, the customer’s income was $49,000.

Perpetual launched the case against the customer, 70 year old pensioner Mr Schmidt, in a bid to recover the funds it had loaned.

Justice Forrest said Violet Home Loans, as the lender’s agent, knew that Mr Schmidt was elderly and that the loan application forms lodged contained discrepancies about Mr Schmidt’s income level.

The Judge also said that while loan forms stated Mr Schmidt was self-employed, Violet Home Loans knew he did not have a business number, and should have made further enquiry on this point.

"By, at the least, turning a blind eye to the irregularities in the loan application and the income declaration, and ensuring that the supplementary information was massaged, Violet Home Loans Australia did not act in good faith,” the Judge said in his ruling.

Violet Home Loans has been ordered to indemnify Perpetual for any losses due to a formal agreement between the parties.

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