HOUSE FIRE

Curley one. I guess it all depends on the equity that you have with what you have left. I mean if the house can be rebuilt by refinancing and you still have the threshold of equity that the bank desires then perhaps it could be done. Not sure about what they would think about the risk you took not to insure though.

Gosh, what were you thinking.

If you clear the block and sell the land ready for someone to build will it be enough to wipe your loan? If so, do this. Bank will probably never know and they'll get their money at settlement like any property sale.

If you open the door to them knowing what you've done. Well, good luck.

the valuer whos doing the valuation will have records of what was there regardless of the clean up. there will be questions and it will be noted in the valuation. Its still probably th ebest option, but the bank isn't not going to find out.

banks talk to each other about mutual clients despite privacy laws. Its under the guise of fr@ud prevention through something called the fr@ud focus group, which they are all members of. I've participated in this and am very familiar with the outcomes. a valuation on a property for land only when the prior valuation and sales records show a house, will result in one bank calling the other to discuss the discrepancy in the asset.

They use a number of ways to skirt around the conversations to stay in the grey area in relation to privacy laws. But rest assured, the original bank has a high likelihood of identifying what's occurred. If there is enough obfuscation of the issue or they feel they're beeing mislead, they will flag fr@ud/potential fr@ud on the client and there will be zero chance of the client getting any support, let alone any future credit for the foreseeable future. That fr@ud flag is tied to credit profile of the client but not visible on their retail/consumer version of the credit file.

Of course you can sell land/house while it has a mortgage. You think people selling houses all actually paid them off first?

The sale proceeds go to the bank to pay the remainder of the mortgage and release the banks interest so the new buyers bank can register their interest over the property for the loan they gave the new owner. That's 99% of the realestate market. The only time banks aren't involved on either side is when someone either has 100% of the cash to pay or the current owner owns outright or both.

You can talk to another bank, but as soon as you start giving them information so they can asses the deals risk and your credit worthiness, you have to give them permission to do verification of the information you're given them. This is when they find out. If you fib to the new bank, they can list you for fr@ud if they find out. The old bank can list you for fr@ud for being dishonest for not telling them about the destruction of the asset they lent you money for.

They don't tell people when they list them for fr@ud. It's easier to say, sorry can't help, bye. And leave it up to you to wonder for up to 10 years why no one will even give you a credit card for 2k.

You may very well be wasting money doing anything other than exiting the situation with your tail between your legs and wearing the consequences. You'll never know. You have the option of lots of bad choices and no good ones.

These are of course the worst case scenarios. But the odds of the worst case scenario actually materialising in this situation are extremely high.

It's clear you are starting to grasp the harsh reality of this situation. Out of curiosity, why did you not insure?

My advice is see a lawyer and get some legal advice. If you cant afford one, your best option is to come clean to the bank and hope they don't fk you in the arze. Wear the consequences and get on with your life.

There's realistically no reason to "keep your mortgage". The mortgage was for the house and land value. Depending on how much you borrowed and how much you still owe, it's very possible you'll never dig yourself out of that hole financially, especially if you try to keep it and hide your mistake. That is of course unless you have a sht tonne of money to rebuild the house out of your own pocket. Eitherway, you've lost a tonne of money sorry to say.

Is the land value more than the mortgage value?
That's probably the most important thing at this point.
If the land value is more than the mortgage owing then you can cut your loses and sell the land. Your bank won't know and ultimately won't care as long as the mortgage is discharged on settlement.
If you can't unload it and cover the mortgage then you have put yourself in a very difficult situation. Realistically if you keep paying the mortgage and never default or give reason for the bank to come looking they will never know. It's not like they drive around physically checking every premises that they hold a mortgage over, so unless they have reason you could probably just continue paying the mortgage for the next 25 years .
That doesn't give you much options though so as others have suggeste, I'd maybe chat with a lawyer to tease out all the legal implications first and then talk to a mortgage broker who can help you work out financial options.
Either way you have unfortunately put yourself in a very weak position moving forward.

The bank not knowing is unlikely. Very unlikely. Like i said, any new contract for the sale will identify through valuation that the asset has changed and will elicit conversations between the lenders. That is certain. Whether they care is really the risk here. If they stand to make no loss, then you're hoping that some low level bank employee isn't having a bad day or isn't naturally vindictive or anal enough to list the fr@ud. Believe me when i tell you, people working these jobs take this listing as little wins for the day and get satisfaction out of knowing what they've done. Separately, as part of the fr@ud focus group, you're obligated to protect the group from such clients. Its a reciprocal arrangement.

Paying the mortgage is an option. albeit the benfit is predicated on the current equity and the direction of teh market in the near to medium term. If the LVR was high (ie OP bought with a 90% loan), they're fkd. While we don't have all the info, its a fair assumption the OP doesnt have significant equity. They seem young and naïve in the comments.

paying the mortgage for the next 25 years if theyre at a high LVR is basically throwing money down the drain (depending on again equity and market direction). youre effectively paying to an asset that had lost a significant portion of the value and your paying interest on the large loan. Youre basically ripping yourself off unless the market is guaranteed to skyrocket(no one has the crystal ball sadly). again location would be paramount - but i get the feeling this place isnt somewhere highly desirable. Gut feel is outer growth or semi regional wher ethe market is mostly flat after sky rocketing last 2 years (ie, OP bought at market highs).

anyway, id rather the OP not get their hopes up

tbh i find that particular part very questionable, as it goes against every bit of compliance training that i've done. in my experience, whenever the data needs to be shared for fr4ud prevention, it's usually done via established mechanisms that are regulated and legislated. it's not done via some backroom talks, and if someone was found out to be sharing customer's data with anyone, let alone a competitor, it would be cause for an immediate dismissal.

for example, there are mechanisms to identify duplicate claims lodged with multiple insurers for the same event, to prevent people from double dipping. that's done via sharing of the limited info via particular integration channels to a separate body, not by a claims officer calling around his mates at other insurers and asking them if the person X has also lodged a claim with them.

Because they're doing due diligence. The level of verification of information is commensurate with the amount of money at stake.
If you're about to give someone hundreds of thousands of dollars, you're going to find out everything about them, some information about the vendor, info about the asset that is going to be your security any risk factors etc.

While the money is the important aspect of the transaction, risk is informed by many factors. A disparity between the prior valuation (i.e. there was a house and now there isn't) is pretty significant information. discrepancies have to be resolved and understood to make a proper assessment of the risk. It could be nothing, but you don't know that without making teh enquiries. The why is relevant.

SO a standard question that would come up during BAU would be around how much of the settlement proceeds are due to the original lender, have they received the insurance pay out, how much money goes to the vendor etc. They're not just going to take the vendors word for it, they're going to call the party that holds the security and where the debt is owed. That's the first thing that will happen and that's when the first lender will be like "what you talkin' about,Willis?" or "yes, this client had a catastrophic fire on the property and the amount due to us is x".

In the first example there is a huge red flag and complicates things for EVERYONE. Banks are just not interested in dealing with all the peripheral stuff that comes from that. It might be a lot of money to a consumer, but a bank missing out on doing a singular potentially high risk deal is of no consequence. Its often simpler to not even investigate fully, decline the deal and list a "possible" fr@ud flag and leave it up to the next lender to work it out when they do their due diligence.

The average lifecycle of a mortgage is around 2-4 years. Not a enough money gets made by a bank in this time in the scheme of things to really care about one deal with many question marks.

Once a question of fr@ud or potential fr@ud comes into it, they are obligated to report it into the Equifax fr@ud focus group shared fr@ud database. That report flags to anyone who has an active account with that client (based on the accounts listed in a credit file). this is also a mechanism in which the old lender will get an alert and may call the new lender and discuss why they added the alert if they haven't spoken already.

Trusting that the mortgage is going to be covered requires that you trust there is no issue with the vendor, the borrower and the asset, not just if the financials stack up.

Yeah. on every single one of them. Just depends which departments are chatting - the settlements teams exchanging information on costs and disbursements, the underwriters externally verifying the asset information and credit worthiness of a client, or the fr@ud teams investigating non standard issues with a deal. So many people between the lenders are touching the deals that if something sticks out, you can guarantee it will be raised and looked into. Fr@ud teams often look over thousands of files that dont even have any fr@ud on them because certain features are unusual. The new lenders proposed security is at stake.


first up - when you apply for ANY credit you sign a consent to disclosure of your personal information in relation to that deal. That includes an ongoing disclosure in relation to that deal. We call this teh privacy waiver, because that's whats happening. You probably think thats just so they can access your credit file, but you should take a closer look at the wording .

There's a few rules that need to be followed in such discussions to stay in front of the APPs and regulations when sharing this information, but as soon as two fr@ud department lackeys are discussing a clients potential fr@ud, the conversation will flow very freely. Fr@ud department calls are often not recorded because they aren't customer facing.

Secondly compliance training provided to businesses is usually too broad in coverage and doesn't discuss nuances of the laws the training is covering that specialised departments use to complete their tasks.

except its not backroom, the mechanisms are well established inside the lenders and inside the worlds largest credit intelligence company (equifax) which every lender has an account with AND the client has consented to the disclosure when they signed one one of the many papers through the mortgage process.

My friend, this is the real world equivalent of not reading the EULA when you click "i agree" to facebook's (or any other services) terms. This isn't some random tellers gossiping sensitive client information with friends from other institutions while they are out at lunch.

this isn't commercially sensitive information, the whole competitor aspect has no bearing on these conversations. The lifecycle of an average mortgages is 2-4 years before it gets refinanced. Losing a customer is irrelevant. Take a look at the size of an average mortgage book and how it fluctuates.


This isn't an insurance claim. Its credit due diligence. Insurance claim investigation is small fry. Claims occur on a small percentage of policies, and the mechanisms are commensurate with those activities. insurance claim investigations occur when a claim is made which is when a fr@ud can occur, because that's when an insurer is paying out money. They'll accept anyone upfront.

For mortgages the transaction is the opposite, and the money is going out the door at the start of the transaction on ALL mortgages. The fr@ud and credit risks can materialise immediately compared to where they do in insurance. Not only are you comparing apples and oranges, dollar for dollar, you're not even the in the same ball park.

A body you're referring for insurance exists in this situation too except at a much more detailed level and, again, the key here is the client has specifically provided consent to a very broad disclosure between the parties that use this body and its services.

I hope this has been educational for you. Probably much more so than your compliance training.

he will have a genuine idea of the value of his dirt without involving a bank
with that knowledge he can then make an informed decision on what to do next
he may already have an idea of dirt values, but has not indicated so
in my area vacant land is about 60% of the value of established home