When the going gets tough the banks get greedy

If borrowers fall into arrears on mortgages and personal loans they could be charged $1000 a year in penalty fees.

Customers of Commonwealth Bank, ANZ and National Australia Bank were being charged between $35 and $45 a month in late payment or "default fees" if they failed to meet their loan repayments on time.

The Sunday Telegraph has reported that customers with a mortgage and a personal loan could pay up to as much as $90 a month in penalty fees- plus interest. These fees are added on top of the arrears, and in the case of mortgages could accrue interest for up to 30 years.

Katherine Lane principal solicitor at the Consumer Credit Legal Centre in NSW (CCLC) felt that these fees were unfair and were only creating hardships. If people couldn't afford their mortgage or loans then they couldn't possibly afford the fees either. These fees are charged until borrowers negotiate some form of agreement to clear the arrears with the banks.

Ms. Lane further went on to say that Australians were proud people and that many didn't contact their banks when times were tough. An ANZ customer who had recently been in a car crash contacted the ANZ bank and asked for help to fill in the hard-ship provision forms, but was informed that if she couldn't fill them in she was not to bother applying for hardship.

This customer has subsequently seen her arrears increase to $4000 through fees and enforcement costs. The ANZ bank is currently pursuing the customer through the courts to repossess her property.

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Published on June 6-th, 2009 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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