Chapter 7: Lender says no to repayment arrangement

This chapter covers:

• If the lender says “no” to your proposed repayment arrangement or does not respond.
• The lender said “yes” to your original proposal but you still need more time.
• You agreed to a repayment arrangement you could not afford and are now missing payments again.

If the lender says “no” to your proposed repayment arrangement or does not respond

You have two options, if the lender says no or doesn’t respond:

• continue to try and negotiate with your lender (only do this if the lender is NOT proceeding with any legal action), or
• lodge a complaint with the complaint resolution scheme, AFCA.

All lenders have a process in place to cover when a person gets behind on their home loan. The main problem you will face is trying to stop that process. It is very common for lenders to commence legal proceedings while you are trying to make a repayment arrangement. You cannot afford to ignore the enforcement steps the lender is taking. See Chapter 3: Can the lender take my house? for the enforcement process.

The lender said “yes” to your original proposal butyou still need more time

It is definitely worth trying to make another repayment arrangement.

Contact the lenders hardship team again.

If the hardship team will not help, try calling the complaint resolution contact for the lender. You can find those details by visiting the Australian Financial Complaints Authority (AFCA) website or calling 1800 931 678.

Make sure you are making regular repayments of an amount you can afford so the lender can see you are trying to pay the mortgage and can keep to regular repayments.

Hardship is short-term, so the longer you are in hardship for the same reason, the harder it can be to keep getting more time as your lender may start questioning if your plan to return to normal repayments is realistic (eg. if you have been looking for work for over 6–12 months).

But if you need more time because something different and outside your control has happened, you have a right to ask for a new hardship variation. For example, if the lender gave you three months hardship because you were off work sick but then your spouse became ill, you are entitled to ask for more hardship if you need additional time off work to be their carer for a few months before you can both return to work.

You agreed to a repayment arrangement you could not afford and are now missing payments again

Lenders may ask you to make repayments that are more than you can afford. If you felt pressured into making a repayment arrangement you could not afford you need to go back to the lender and say this. Tell the lender the original repayment arrangement was unsuitable, and it needs to be changed.

Lodging a complaint with the complaint resolution scheme AFCA

There are three parts to lodging a complaint with AFCA.

1. lodging your complaint
2. conciliation/settlement negotiations
3. determination.

Lodging your complaint

You can lodge your complaint in a number of ways:

1. Complete an online application form at the AFCA website.
2. Print out an application form the AFCA website, and email or post it to AFCA.
3. Call AFCA on 1800 931 678 and ask them to send you a form to complete.
4. If you have a disability or you will have difficulty completing the application, you can ask AFCA to complete the application over the phone.
5. If you need an interpreter, AFCA will organise a telephone interpreter for you for free.

Conciliation conferences

Once you have lodged a complaint with AFCA you may be asked to:

• complete a statement of financial position, and
• attend a telephone conciliation conference with your lender.

Statement of financial position

You can get help completing the financial statement from a free financial counsellor. For more information see Completing a statement of financial position.

Telephone conciliation conference

A conciliation conference is simply a conversation between you, your lender and an independent person from the complaint resolution scheme, AFCA.

The person from AFCA will talk to both parties to understand the issues.

A telephone conciliation conference is an opportunity for you and the lender to negotiate a repayment arrangement.

You must attend the telephone conciliation conference. Do not agree to a time for the conference that you may not be able to attend. If something happens and you cannot attend, call AFCA on 1800 931 678 as soon as possible and reschedule the conference. Visit the AFCA's guide to attending a conciliation conference for more information.

Some tips to remember when you are at the conciliation conference:

1. Get financial counselling or legal advice before the conciliation conference to discuss what a realistic outcome should be.
2. Remain calm. Try not to take anything personally; just concentrate on getting an arrangement that suits you.
3. You do not have to come to an agreement at theconference. If you do not agree, AFCA still has the powerto determine your financial hardship complaint.
4. Do NOT agree to an arrangement that is:
   1. not affordable
   2. requires the payment of a lump sum you are not sureyou can get
   3. is not long enough or the lender won’t agree to review itafter an initial period if needed
   4. requires you to agree to a court judgment
   5. does not cover what will happen at the end of theagreed period of lower repayments/no repayments, or
   6. is not suitable for you.
5. Make sure your settlement is a workable arrangement. See the checklist below.

Determination

If you and the lender cannot agree on a hardship arrangement, AFCA can determine (decide) the matter. AFCA will consider:

• Are you in hardship because of unemployment, illness or other reasonable cause?
• Can you afford the new repayment arrangement requested?
• How long have you been in hardship? Are you still in hardship for the same reason, or have other events happened?
• Will you get back on track with normal payments within a reasonable time? Or if not, are you able to pay out the whole loan within a reasonable time (eg. by selling the home)?
• What assistance has the lender offered you?

If AFCA has told you that your matter will now go to determination or is pressuring you to settle or drop your complaint, get legal advice immediately.