Families have become crippled with debt or lost their houses after dealing with a property company that offers to get low income immigrants into their own homes. Tony Wall and Emma Page follow the trail of misery.
It’s a Wednesday night in Otahuhu, South Auckland, and a trickle of Samoan families are arriving at the Home Ownership Company’s offices armed with big dreams, but no money.
The company’s general manager, Scott Ball, presents a slick slideshow explaining how they can buy their first home or an investment property with 100% finance, even if they have no savings or bad credit histories.
“Don’t the banks have to see a savings history?” asks a Samoan woman in the front row. “No,” says Ball, “we’ve never had to show that.”
Ball explains that the Home Ownership Company does not charge fees, taking its cut from the banks, but lends people the difference to cover other fees and a deposit. “You end up with two loans you are paying off.”
The company then goes looking for homes that best suit the family involved, he says. “All you have to do is focus on going to work, earning money, and we’ll do it all for you,” says Ball. “Are there any questions?”
Just one, from the woman who spoke earlier: “Where do we sign up?”
If only it were that simple.
A Sunday Star-Times investigation has found that not only has the Home Ownership Company and its affiliated offshoots made millions of dollars by adding up to $40,000 to the price of each property, concerns have been expressed about the financial information the company has provided to lending institutions. Even more troubling, there have been cases where families who thought their existing debts had been consolidated as part of a complicated two-tier mortgage structure have found that their other debts have not been cleared at all, and that other finance companies have caveats over their homes.
Some families are spending most of their incomes on their mortgages, including penalty interest payments of 25%, often while working in low-paid jobs. Some are skimping on food and other essentials in a desperate effort to keep afloat.
The BNZ severed ties with the company in 2005. “The Bank of New Zealand terminated the relationship with the Home Ownership Company following a review of the business which raised multiple concerns about both the quality of the information we were receiving and whether clients were being fully and independently informed about the commitment they were undertaking,” says Blair Vernon, the bank’s general manager of strategy and marketing.
Rob Thumath, a South Auckland mortgage manager, says he financed about 60 of Home Ownership’s clients before breaking ties with the company because it had failed to disclose in many cases that families were paying off a second mortgage with the company’s lending arm, Ready Finance.
He is concerned it is targeting naive and vulnerable people. He says about a third of those clients have defaulted on repayments and he would not have approved the loans if he had known the full picture. “We have people in here crying every week,” he says. “It’s sale at all costs and to hell with the consequences. They sure as hell aren’t doing this on the North Shore it’s a niche market Samoans in south and west Auckland.”
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