Agreed. The account I read of the settlement was in today's "The Australian". No longer have the paper but was rather surprised at the implication in the way the article was written that it was the CBA who inflated the property values and borrowers' incomes.
Throughout this thread, no one has actually been able to say where this inflating of values occurred, and I guess most of us assumed it would have been by Cassimatis.
If that's wrong, and the bank has indeed exaggerated dollar amounts, then for sure they do need to provide compensation, although I still can't understand how the client didn't - when reading the loan paperwork - see the figures involved in servicing the loan (surely these were provided???) and understand that the amounts involved did not represent either the value of their home or their income.
Maybe I'm quite misunderstanding this situation.
I'm sure I posted about the valuation process at some time several months ago on this thread - can't really be bothered reading back through it to find it. As to income figures - who would know what was used. The only income figures I ever provided the CBA were for our original loan taken out a couple of years before the last "step". I can only assume the bank used them, plus whatever info they accepted from storm itself??? As I wanted my loan approved at the time (naturally I now wish it had been declined
) I didn't really care. My gripe is not over whether I could afford a loan or not, I readily accept it was my decision to take on more debt, but it is over the valuation of my property used to secure extra debt - which I had no reason to suspect was not the CBA's usual conservative approach to valuations. I was left with debt that almost equaled the value of my property - which would normally not be the case if an inspection had been carried out and a valuer used, rather than a figure plucked from a desktop system based on heaven-knows-what. If I had been left with no option but to sell my home to repay debts (regardless of whose fault it was that I found myself in such a predicament) I would have been left with no equity in my home either - and this would have been due to my acceptance of the CBA's valuation of my home, which the CBA were happy to lend against. I guess the question is whether clients had a right to expect valuations to be accurate, and whether the CBA had a duty of care to ensure that they weren't lending against inflated valuations carried out imprudently. It would appear that an agreement has been reached that implies the valuation process used at the time was less than it should have been. I'm sure some will say it was up to the borrower to ensure that their home was worth what the bank said it was worth - personally I didn't have the time or expertise to be a property valuer myself and would never have dreamed that a bank valuation would be anything but on the conservative side. Again, with hindsight, should I have paid a registered valuer to make sure my banker knew its business?
As to the issue of borrower's incomes, my personal view is if you take on the loan you should know whether you can afford it or not, but again it appears that the legal view is that the bank has a duty to ensure a borrower can afford what they've applied for.
For the record, I've never seen loan documents that include valuation and income details. Valuations are often confidential to the lender, as they have carried out the valuation for their own purposes to ensure security of their loans at min 80% LVR, and unless arranged and paid for by the client are not the property of the client. The client does, however, know that the bank will not lend more than 80% of the value of the property offered as security for the loan. Income details are generally submitted on the loan application, which is held by the bank but is not included in the loan contracts and mortgage documents which the borrower signs. I'd say it is not uncommon for updates to income to be given verbally once the original loan application has been taken. Clients that obtained increases to their original loan over the years probably never signed another application, but merely submitted or verbally advised new income details. This is my experience in any case.
As these details were generally provided to a storm adviser, rather than directly to the bank, I guess we may never know if any embellishment occurred at either end. But to answer your question, no - the client wouldn't see the income figures used by the bank when signing the paperwork for a loan. Given the resolution agreed to by CBA, my own reading of it is that the CBA has acknowledged that usual lending guidelines may not have been applied to some lending to cba/storm clients. If it is found that valuations are correct and income details support the loans granted, then no compensation will be forthcoming.
And, considering I will already be being accused of 'blaming the victims', I do have a concern that if Stormers (and Cassimatis) are able to take the view that the whole arrangement was sensible and conservative just because CBA are coming up with some dollars to save their reputation, these Storm clients will not be any wiser for the future and could therefore fall into similar traps all over again.
I really don't want to play the blame game all over again. I cannot for the life of me imagine how any ex-stormer could possibly have avoided questioning the strategy (or more to the point the lack of strategy) used by storm over the past year or more. To think that any of us will "take the view that just because the CBA are coming up with some dollars to save their reputation, therefore the whole arrangement was sensible" - is quite a stretch, and giving very little credit to the ability of people to learn from mistakes and history. Even those who would do the same again would surely now admit that the level of gearing was far from the conservative level it was sold to them as. To be concerned that people who have seen their hard-earned life savings decimated, faced losing their homes (or have already lost them), been the subject of numerous media stories, been involved in resolution processes, numerous bank interviews etc, yet would do exactly the same thing over again is probably a waste of your concern Julia. I'm sure it's well-meant concern, and I don't mean to be condescending, but I'm also sure that most ex-stormers have spent enough sleepless nights worrying about their futures to have had second, third and fourth thoughts about the storm method, Cassimatis and their financial strategies going into the future. I was no doubt too trusting, gullible and financially naive when I followed the advice I received from my storm adviser, but to have someone wonder whether I'd do it all again in the future is a bit insulting from my perspective. I suppose I should only speak for myself, but I find it almost impossible to believe that the majority of ex-stormers haven't learnt anything at all from what we've been through. To see any compensation paid by the CBA in restitution for their shortcomings in the whole sorry saga as an endorsement of the strategy would be clutching at straws imo, and no doubt will be exactly what EC & JC and their few diehard followers will do - and I don't think they warrant anyone's concern!