PHOTO: ANZ. FILE
In a situation where her home is at risk due to a loan taken out by her former husband, a woman alleges that she was never made aware of the true nature of this lending.
Referred to as Linda, to protect her identity due to her claims of an abusive former marriage, she recounted the origins of her predicament back in 2015. At that time, her then-husband secured financing to purchase a struggling business. Linda was not involved in the loan application process and had assumed the loan would not be granted, given the business’s financial woes. To her surprise, the loan was approved.
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According to Linda, she was informed at the time that ANZ would provide the funds on the condition that they transferred their mortgage to the bank. She was directed to visit a solicitor she had never met or communicated with to sign the new mortgage documents. However, she claims that the solicitor failed to disclose that she was also signing a personal guarantee for a business loan against her house, a loan that had been acquired without her knowledge or consent.
It wasn’t until her marriage ended in 2019 that Linda discovered the full extent of what she had signed. She asserts that her husband subsequently terminated her from the business, blocked her access to business accounts, and denied her access to business-related emails. ANZ was willing to approve her to take over the home mortgage, but they required the business loan to be completely paid off first, as it was secured against the house.
“The business loan is secured against the house, and ANZ won’t leave it unsecured. So, unless I take it on as part of the mortgage, which I can’t do, it has to be paid off for me to take over the home loan,” she explained.
In November 2020, she filed a complaint with ANZ, arguing that the guarantee should not be enforceable because she had not been involved in the application process, citing the coercive control and abuse in her marriage.
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“It is unbelievable that lending I never sought out is now jeopardizing my home. I wasn’t part of the process, the lending process was flawed, and the application information contradicted other information they had. Additionally, there was no personal mobile number provided for me. I believe there were enough warning signs for them to either expand their inquiries before approving the loan or insist that I seek independent advice.”
She also filed a complaint against the solicitor with the New Zealand Law Society, which is still under review.
“I have until November 30 to refinance the lending for my home and my ex-husband’s business under my sole name, otherwise I will have to sell my home,” she said. ANZ has informed her that her current income is insufficient for this option as she is currently pursuing her studies.
“If I am compelled to sell my home and repay my ex-husband’s business debt, my children and I will be left in a very precarious financial situation.”
ANZ expressed sympathy for her situation, acknowledging its complexity. “We understand it is a complicated and difficult situation.”
The bank also noted that Linda had received legal advice before giving the guarantee. “She may wish to talk to the solicitor if she is concerned about the quality of that advice.”
ANZ expressed its willingness to collaborate with her to find a solution.
Linda subsequently filed a complaint with the Banking Ombudsman, which, while unable to rule that the guarantee should be set aside, determined that the bank had fulfilled its obligations to Linda. However, it did point out that her complaint underscored areas where bank processes could be enhanced.
“It would have been best practice for the bank to have required that you sign a separate ‘waiver of independent legal advice,’ which ensures that the recommendation of independent legal advice is clearly drawn to the potential guarantor’s attention,” the scheme said in its letter to her.
It also highlighted that best practice would involve direct contact with both parties before sending documentation to a lawyer.
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“We will be sharing insights from your case with not just ANZ but all banks, with a recommendation that they review their processes to ensure customers in situations similar to yours are effectively communicated with and potential vulnerabilities are considered.
“This review should consider processes to ensure the potential guarantor is provided with relevant information about the proposed lending and guarantee, the potential guarantor is provided with adequate time to consider the information and whether to obtain independent legal advice … and that instructions to the nominated solicitor highlight that the solicitor should consider providing any advice and recommendation about getting independent legal advice to the potential guarantor without the presence of any other party to the transaction to prevent any undue influence.”
SOURCE: STUFF