Stressed borrowers conned out of homes

CORPORATE vultures preying on mortgage-stressed homeowners have been threatened with legal action by the Australian Competition and Consumer Commission (ACCC).

ACCC chairman Graeme Samuel warned yesterday he would use the Trade Practices Act to prosecute entrepreneurial predators, who pressure families to sell their homes at vastly undervalued prices.

In January, The Sunday Telegraph revealed the rise of a new type of entrepreneur, offering online quotes and quick money to homeowners who are behind on their repayments, if they bypass real estate agents and accept a deal to sell within days.

Mr Samuel said he was concerned at the emergence of opportunists, who were using the Internet and posters taped to light poles to tout for business from distressed owners.

He urged people who had been approached to contact the ACCC, so it could take action.

"These operators are akin to some well-known operators in the securities market,'' Mr Samuel said.

"The courts have found that when dealing with consumers under stress, people who take advantage of this unfairly are potentially in breach (of the Act).

"The law would permit us to take injunctions to prevent unfair sales.''

The ACCC will today launch a new section on it website, called managing your mortgage, offering advice to people experiencing mortgage stress or who are struggling to meet their mortgage repayments.

Mr Samuel said it was vital for people in financial difficulties to seek help early and know their rights.

The ACCC began investigating the activities of property predators after concerned western Sydney residents approached Assistant Treasurer Chris Bowen and Blaxland MP Jason Clare.

"Homeowners... need to be aware of superficially attractive `quick-sell' techniques of certain home-buying companies, as well as offers to refinance a loan that may leave a family even worse off than before,'' Mr Bowen said.

Home repossessions in Sydney have more than doubled in three years.

In a nutshell:

- BANKS and other financial institutions are using bully-boy tactics to scare homeowners behind on their mortgage repayments - by threatening to throw them out on the street. Stressed borrowers are being pressured to sell at undervalued prices.

- People who have been approached are urged to call the ACCC

- ACCC would look to seek an injunction to stop unfair sales.

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Published on June 6-th, 2008 in Home Loans
Damon Rasheed is the CEO of Rate Detective, an Australian financial service comparison sites specialising in Life Insurance, Income Protection Insurance and home loans. Damon holds a Master's Degree in Economics from the University of Melbourne and has been involved in many start-up internet businesses.

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