BATTLERS RELEASED FROM LOAN CONTRACTS
Hope for wrap victims with Supreme Court decision.
Article originally published MAY 10, 2005 –Reviewed and approved.
By Neil Jenman
Four years ago, Tim O’Dwyer, a feisty consumer lawyer gave this warning to any investor considering property wrapping, “Find a more conscionable way to make your money, pal. And watch out that you aren’t breaking the law, because when your buyers seek out independent legal advice, their shrewd and consumer-concerned solicitors will be looking for the loopholes, the illegalities and the ways to make you pay!”
Property wrapping is a form of loan sharking where investors (‘wrappers’) sell over-priced homes on over-inflated interest terms. Their targets are usually battling home-buyers. Unlike bank loans, the wrappers retain title to the homes which leaves the battlers exposed.
Over the past four years, wrap deals have exploded due, largely, to get-rich spruikers who have taught the wrap scam to thousands of dollar-eyed hopeful millionaires.
But a decision in the Queensland Supreme Court, which was announced yesterday by the Queensland Office of Fair Trading, should send shivers down the spines of all wrappers.
John Gunther, a property dealer-cum-scammer was ordered to pay compensation to his victims plus release them from their loan agreements – including their obligation to repay the loans.
In a case eerily similar to the standard wrap deal, Gunther bought homes in lower-priced areas and re-sold them at heavily inflated prices to eager but battling home-buyers who were offered second-mortgage loans with one of Gunther’s companies.
The scheme was described as, “deliberately manipulative, devised to make large profits resulting in the purchasers acquiring houses at prices well above their value, and it callously led these purchasers to become indebted to the bank and to Gunther’s companies when they had little or no prospect of servicing those debts.”
Such a description almost fits the standard wrap deal. Except, of course, that a wrap deal is worse because the battlers are under the complete control of the wrappers for the entire loan, not just a second mortgage.
Last night, Tim O’Dwyer praised the Office of Fair Trading for acting on his complaint. “It was a long time coming but it’s very good news,” he said.
And he repeated his earlier message to any investor thinking of getting involved in wrap-finance deals – “Find a more conscionable way to make your money, pal”.
If not, lawyers such as O’Dwyer will do all they can to stop you.
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