Determination - 4 June 2014

Key issue: Whether the mortgagee exercised due care and skill by withholding its consent to the higher sale price of the consumers’ property.

Summary of Determination

  1. I find that 
    1. the consumers’ lender failed to act with due care and skill when it withheld its consent as mortgagee to the sale of the consumers’ property in April 2011 for an amount of $445,000;
    2. had the lender acted with due care and skill, the amount of the shortfall debt which was assigned to the FSP (the lender’s mortgage insurer) would have been substantially lower; as a consequence of the lender’s failure to act with due care and skill,
    3. the consumers have a right of set-off against the FSP’s claim for payment of the shortfall debt;
    4. the FSP should reduce the amount of the shortfall debt by the amount of the set-off; and
    5. the FSP is not the proper respondent to the consumers’ claim for compensation for stress and inconvenience which the consumers experienced as a result of the actions of the lender.
  2. I order the FSP to:
    1. reduce the shortfall debt of $62,466.54 by the amount of $53,812.65; and 
    2. where a credit reporting body maintains a credit file on one or both of the consumers in relation to the loan, take whatever steps are necessary to amend the credit file such that the amount the debt listed as being in default does not exceed $8,653.89.

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