Clayton’s Finance Approval (The Approval You Have When You Don’t Have Approval)

[Author – Tim ODwyer]

The fax came through late one afternoon from the mortgage broker for a residential property buyer on whose behalf I was acting.

“Dear Tim,” it familiarly began, “I am pleased to advise that finance has been approved, to assist with the purchase of the above-mentioned property.”

Clayton's - The drink you have when you're not having a drinkThe fax, which was on the broking company’s letterhead, continued that the broker (THE LOAN MARKET MULTIBANK LENDING CENTRE) was pleased to be involved in the process of securing finance for my client, and gave a contact number if I had any further questions regarding this approval.

It was signed off sincerely by a “Mortgage Consultant”.

Accompanying this fax was a copy of a letter addressed to the broker from the lending bank, BankWest (Bank of Western Australia Ltd.). This finance approval letter began: “We wish to confirm the loan application received at BankWest Consumer Sanctioning has been Unconditionally Approved.”

The letter then identified the customer, specified the property to be used as security and gave details of the loan type, the loan amount, the term of the loan, the interest rate and the “standard” application fee.

Despite the loan’s having been “Unconditionally Approved”, BankWest proceeded to spell out what it unashamedly called “Conditions of Approval”: “Original FHOG (First Home Owners Grant?) application to be held with applicable supporting documentation. Approval indicated above is subject to the Bank’s normal terms and conditions being met, including those listed above which require acceptance by the customer before further action can be taken. Commission will be payable (if applicable) upon settlement or draw down of the loan only.”

I promptly phoned the telephone number supplied by BankWest if any assistance was required, quoted the reference number supplied and asked when my client would discover what the Bank’s “normal terms and conditions” were. “These will be couriered to the borrower in a week’s time,” I was told.

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