New Nab Chief making his mark on Australian society

What implication does Nab’s new Chief, Ross McEwan’s plan to “teach bankers how to be bankers” have for business, home and farm borrowers with nab or any other Australian bank when the corona crisis ends ? Check it out at  https://gbac.com.au/blog.php

If you are one of the 400,000 bank borrowers on a temporary relief plan, now is the time to think about what to do when the covid restrictions are lifted.

Debt disaster descending on rural Australia

There is a rural debt disaster heading Australia’s way

be prepared

so “Be Prepared”, as Lord Robert Baden Powell said.

The first step that all indebted farmers and rural businesses should take is to make an appointment with their local Rural Financial Counsellor to negotiate the longest term finance on the best terms possible with their bank and to make their business as profitable as possible by cutting all unne

bushfires

cessary expenses and doing everything they can to get income back on track after the prolonged drought, floods and fires

that have done so much damage.

https://www.agriculture.gov.au/ag-farm-food/drought/assistance/rural-financial-counselling-service

If the RFC cannot assist you or the bank is already taking recovery action, you may wish to give us a call at www.gbac.com.au and learn why it is sometimes necessary to take the whip to the bank. We can also explain why few loan & debt consultants have the leverage with the banks that we have.

Don’t wait ‘til it’s too late. The best loan fix is the early fix, before problems arise.

Greg

Best Debt Negotiator for Borrowers

debt negotiatorA debt negotiator’s claim in Sydney Morning Herald on May 1, to be 1st in Australia (in 2001) is false. GBAC & Moneygrams began negotiating on bank loan applications and write-offs in 1987. Last year one major bank wrote off 100% of a large mortgage loan for GBAC. They have arranged debt write offs, better loans and re-finance in every state and territory in Australia for 30+ years.

Nobody has the same negotiating tools, experience or solutions as GBAC backed by FairGO and the Australian Voters Network does. They don’t do this to earn a living. They do it because they care deeply that Australians are treated fairly by their governments and their financial institutions.

Most borrowers simply do not have the time or skills to do this negotiating and few negotiators care enough to put their customers first before their own fees. GBAC negotiate very hard with the banks to get a good deal for borrowers. They would not have been attracting debt laden borrowers for over 30 years if They could not do the job well.

But it also pays to borrow well in the first place and without professional assistance that is almost impossible. Then management of your loan is very important throughout its term. This is where many borrowers, particularly businesses and farms, come unstuck. It is not expensive to do, but is great protection against foreclosure.

Massive “No Value” Mortgage Insurance Fraud by BIG

The article in the Sydney Morning Herald Money section today by Nina Hendy touched on but did not explain the greatest financial services fraud operated in Australia today by banks and insurance companies.

GBAC took on one bank & insurance company on behalf of one borrower who asked for help, and won. The borrower walked away without repaying the debt. We will take them on for you any time.

Here is how the bank run scam works. When lending money for a home loan the Big Bank requires the borrower to pay a premium, say $15,000 to an insurance company for Mortgage Insurance. The bank may actually own the mortgage insurance company. The borrower pays the premium. Years later through some disaster, the borrower defaults. The bank claims on the mortgage insurance and recovers the whole debt from the insurance company. In doing so it assigns its rights under the mortgage loan to the insurance company. The insurance company then owns the debt, the mortgage and the title deeds to the home. The insurance company then sues the borrower to repay the loan back to it in full.

Simple. Better than tax fraud or armed robbery. The borrower paid the premium but did not get insurance cover. The insurance company received the $15,000 premium but recovered everything it paid out from the borrower who paid the premium. These guys are clever. You have to hand it to them.

The sensible thing would be borrower insurance where the borrower paid the premium and received the cover with which they paid out the bank loan. But such a plan would never allow bank or insurance bosses to earn $30,000 a day. What else but crime pays that sort of money?

History

The Federal government in 1965 established the Housing Loans Insurance Corporation to provide the home loan insurance. Run by the government it was honest because it worked for the Australian people. My wife and I were lucky enough to borrow 95% of our home price that way. But when banks and insurance companies were privatised by politicians to reward their political donors, honesty went out the window and the profiteers who took over banking and insurance, robbed everyone they could.

This is like car insurance companies paying your claim for the car being written off, then suing you to recover the money. You would get no value from your policy. LMI is like that!

If you or anyone you know is caught up in this shoddy Lender’s Mortgage Insurance fraud, please ask them to contact GBAC for assistance. Australians should not tolerate this fraud that is primarily aimed at young Australians with young families. These financial fraudsters should be gaoled. But at least you can fight their claim on their “No Value” insurance policy. There is every chance of you walking away too instead of paying a premium for no value.

Don’t be robbed by The BIG- Bank and Insurance Gang.

Coronavirus financial impacts

Causes

Those who have always saved money and borrowed little will have missed out on some pleasures they could not afford, but they will have savings to help tide them over much of the present crisis.virus

Those who have spent, not what they have saved, but by borrowing in anticipation of what they will earn in future, may have come unstuck. Foretelling the future is a risky business. Happy to help them get the finance they need in a way that does not mortgage their soul for life.

While some Australians struggle on the median wage of about $50,000 pa, some business executives and owners earn up to 200 times that and public companies earn billions after paying very little tax. A few are very generous with their money. Most are just sucking cash out of the economy like giant vacuum cleaners for their own use. Many are sending it offshore to avoid tax, laundering it through international call centres, banks, accountants and lawyers, thanks to generous politicians who pass the laws that allow them to do so.

Cures

Saving instead of borrowing is probably the most important cure. It is being in debt that creates a crisis out of any loss of income.cures

Using the credit card sparingly but to get through the crisis then paying it off. Using cash or paying the full card balance off every month is the wisest course of action to avoid risk.

Looking before you leap into a loan, with a good loan consultant like my GBAC at your side, is probably a good move. Know whether or not you can meet the loan terms. They all have to be paid back in the end.

Expert loan management enables the borrower instead of the bank to benefit most.

Poorer people than the ultra-rich control the vast majority of votes, so for them, taking a greater interest in government could earn them a lot more money than working two jobs.

That is one reason why, as well as helping small business and farmers get a fair go from their banks through GBAC, I run the FairGO Voterlobby and the Australian Voters Network. Free enterprise capitalism is a great system, but it does not have to involve greed and self-indulgence or political bias toward the donors who finance election campaigns. Voters own the votes. By wise use of votes they can vastly improve their lives.

Borrowing more from banks is a two edged sword. Today it has restored business life to normal. Tomorrow it might cut off your head.

The government, led by the Feds, have done a great thing by moving to stimulate the economy and put money into the hands of those worst affected. That is a great role for government. Of course later there will be a massive debt for us to all pay off, but if we work hard and share the tax load fairly we can all recover well. Let’s hope the strong take the weak with them. Take time if you can to thank your MP, because they will all be working hard on this corona-crisis. Ring your local MP or send a Votergram to every one of them.

The way to pay of business debt is to work hard, ensure profitability and schedule debt repayment as a top priority.

GBAC has played a strong role for over 30 years by negotiating debt repayment deals with banks on behalf of borrowers. There are many times when a bank will accept less than face value for a debt – always when it works well for the bank. GBAC has developed special skills in that area. A few months ago a bank wrote off the whole debt which was a great deal of money. Banks can be very decent when approached properly and they do have a bit of lee-way because they are so profitable.

People do deserve fair treatment, even from moneylenders. Make sure you get it.

Part of the cure is to take control of your finances and never let them go. Control the lender instead of letting the lender control you. That means understanding and honouring your own obligations before accepting any loan.

Corona Crisis and Difficult Debts

For 10 hints on how to handle the corona virus check out the GBAC website blog  of 13 March.

The impact looks likely to be fairly severe in financial terms. Apart from that blog, the website will give you plenty of helpful advice about debt solutions.

I am constantly surprised by the inadequate assistance  given to borrowers by a range of free services. There is a saying that everything is worth what you pay for it. That is not always true. There is a lot of very well meaning and supportive assistance available. However, when dealing with many difficult debt situations people can lose everything by going with well-meaning advisers. Some advisers want to be fair to the lender as well as the borrower. Some have no ability to negotiate at all.

What distinguishes GBAC is that in addition to it being well-meaning, it is also hard hitting. It has developed some unique and very successful strategies  for making banks treat borrowers very fairly.

The problem with being fair to banks as well as borrowers is that bankers have a great advantage over borrowers in that bankers handle loans all day every day whereas borrowers do it only a few time in their lives, so they really do not understand loans anything like as well as the bankers. Nor do borrowers have all the specialist credit assessors and lawyers the banks have to help them.

in addition the banks, thanks to massive lobbying, have had governments pass laws that favour banks over borrowers.

To counter that a bit we tend to use the services of associate FairGO to involve the Members of Parliament in helping voters get fair treatment from their banks.

Mortgage Insurance

Mortgage protection insurance is insurance that the borrower takes out and pays for directly to protect from default on their loan repayments or if they fall ill or die.  It is very often confused with Lenders Mortgage Insurance that the borrower pays to cover the Lenders risk.  The reason for the confusion is also because the premium is subtly added to the loan and often called Mortgage Insurance which can fool the borrower into thinking it covers the borrowers for the risk of the loan going bad.

In this case when our client, who had paid $10,000 insurance premium, defaulted, we negotiated with the bank to write off the debt in full. But then the bank assigned the debt to the Insurance Company which paid the claim (which the bank itself owned 100%).  Then the insurance company sought to recover the debt from our client the borrower.

If the insurance company had been allowed to succeed, our clients the borrowers would have paid the 10,000 insurance premium and the bank would have received the claim money, which would have been demonstratively unfair. So we undertook serious negotiations with the insurance company. In the end they conceded that they would not make any claim against the home owners.

What the bank was trying to do with its wholly owned insurance company was to have its financial cake and eat it too. Beware of banks and remember they are only interested in making profits.

Lesson: If you want protection to cover the risk of defaulting on your loan, ensure you take the Borrowers mortgage insurance which the insurance company will pay to you if you cannot make repayments and then you can pay to the bank to clear your debt. You may also have to take Lenders Mortgage Insurance if the bank considers you a high risk borrower.

Have the economic planets collided?

China Vs USA on trade; world economies unsettled; drought, fire, flood at home, house prices over the moon, wages planets collidestagnant, debt at record levels and now corona virus.

What does this suggest to those who are battling heavy debt loads? To me it suggests action is needed. Possibilities range from negotiating with the bank or lender to give you a substantial discount if you pay the loan out or refinance elsewhere, right down to negotiating an extension of loan terms in case the economy nose dives. A fall in house prices could trigger a swag of foreclosures with people losing much of what they have invested in their homes.

Tonight I heard on TV from a reasonably credible source that a person who works just 1 hour a week is classified by the Australian Bureau of Statistics as “Employed”. This surely is a political and bureaucratic farce and perhaps a lie. That person is not really employed. I suspect that most of us think of at least 35 hours a week as being” employed” while anything less is “underemployed”. That tells us that there is a major problem with our economy. In addition we know that wages have stagnated while some top executives are paid up to $40,000 a day. Those execs can increase their wealth exponentially by buying up what the poorer Aussies cannot even imagine.

What the Corona virus has highlighted is how much we buy from China instead of having it produced in Australia. Is it any wonder that wages have stagnated and that even then many people cannot get a week’s paid work?

If jobs are scarce and wages low, a lot of people could be in trouble with debt. There are financial counsellors around Australia who can help many people deal with debt. They are not very likely to wage a full scale war against major lenders who have done the wrong thing by borrowers, but they can do a lot to help anyone with financial problems.

The homebuyer, farmer or business owner in serious debt trouble or with serious debt trouble looming, would be well advised to chat to a senior consultant at either GBAC or its associate FairGO. Together those two combine skills in loan investigations, debt negotiations and political persuasion. As such they a formidable force to be reckoned with by any bank and a very handy ally for any borrower.

Financial issues                                                                                                                GBAC Packages

If profits are high Future Planning.
If there is surplus cash Money for Me
If farm accounts cannot be paid Creditor Scheduling.
If the tax return shows losses Loss Checker
If the farm makes a loss one year Loss Checker.
If the farm makes repeat losses Loss Checker
If you are borrowing money Loan Leader – borrowing module
Before you accept a loan offer Loan Leader – borrowing module
If you exceed your overdraft limit Loan Leader – management module
If loan repayments are overdue Loan Leader – management module
If the bank is pressing you about your loan payments Loan Leader – management module
If any bank is treating you badly or unfairly Bank Beater
If you are heavily in debt Debt Dissolver
When your accountant has given you your annual financial statements Financial health check Analysis
If you want budgets Financial analysis
If you have children who you think might want to take on the farm Succession Planning
If you own the farm Ownership structure
If you do not have a budget or don’t compare it with actual results for this and previous years Financial Analysis
To review what is happening with farm finances Financial analysis.
To make a 5 and 10 year plan for the farm Farm Plan
To prepare for disaster in case it strikes Farm Plan
To increase the amount you draw out of the farm on a regular basis for yourself? Money for Me
When farm finances are working like clockwork Lifestyle
For a saving plan like a breeding or yield plan? Savings Plan

 

How to make money and enjoy the lifestyle out of buying a farm

A farm couple were buying a large farm in the Central West of NSW. It had a timber homestead with a 3 metre verandah all around with a modern kitchen. It also had a second smaller house in which the vendors son and daughter-in-law had lived before buying their own place in another state.
Fences were okay but not brilliant – stock proof. The yards looked good. There were substantial grain silos and good sized shed plus some excellent dams – 5,000 and 10,000 Cubic metres. It was about a quarter timbered, half good grazing country with the right sort of trees growing and a nice modern 4 stand shearing shed.

Buying a business
They spent a day driving around the property with and without the present owner then came back to the house late afternoon. They were very enthusiastic about the place and were pretty interested.
Over a cup of tea the lady asked if they could see the last 5 years tax returns and assessments. The vendor was staggered. “What for”, he asked. “They are private!”
“Well”, the guy who was buying joined in “we are not just buying a block of land. We are buying a business. It is just as important to know how much money the place earns in wool and sheep sales and what it costs to run, as it is to check out the dams, yards and fences. We would keep the information completely confidential.”
The owner then went of, somewhat reluctantly and came back with tax returns. The prospective buyers had particularly asked for tax assessments so he had them too. When the buyer had looked over them he asked “Would you mind if I gave these to my farm financial consultant as I am not so good on figures myself? He is in Sydney, so nobody local will see them.”
“Go your hardest.” said the owner.  “I’m the same as you with figures.”
Next day, back home in a rural city, the couple who had inspected the place scanned and sent the financial statements and tax assessments to their consultant in Sydney.

Doing the sums
The consultant, a qualified accountant and experienced farmer himself, looked over the figures and came back with these comments:
“The figures show 5 straight years of tax losses, so that is not too impressive, but the owners will say those are just “paper losses” so I have to look a bit deeper.
What stock is he running and what age are they? Some of his profits are probably  in his ewes at a lot more money than they appear in the books. Some gear is probably over-depreciated.
When you looked in the shed did you see much fencing material or fuel?  The expenses could include buying stuff in June to get a tax deduction for what will be used next year.
There is depreciation on 2 tractors and 2 vehicles. One of the vehicles may just be personal use but I suspect it is used at least half for the farm. Electricity I suspect is mainly private and probably part of fuel is private, but you could not run the place without them.
Looking through all of the expenses they look fairly normal to me.
How new are the fences and yards? It is possible that money has been spent in these 5 years on fences and yards that will last decades.
There is interest and borrowing charges and a debt has been reduced, plus consultants’ fees that probably relate to it.”

The buyers responded that there was not much fuel or fencing material in the shed & maybe 10% of the fencing was fairly new, there was a silo of oats and that the yards have a new race but that was about all. The consultant gave them a list of expenses and suggested they go back and talk with the vendors about how likely it was that expenses could be cut substantially to turn the losses into profits.

A Profitable Purchase
On the basis of what they had learned the buyers negotiated the sale price down by a quarter and by paying half in cash, the vendor gave them 8 years interest free vendor finance payable annually out of the wool & sheep sales, in return for him continuing to live in the main house until the price was paid in full. They came up with a budget for a modest profit in the first year, half as much again in the second year and a good profit in the 3rd year. It would be lean going but they reckoned they could pay off the balance of the purchase price within the 8 years and move from the smaller house into the main house then.

Moral – The best farm lifestyle is profitable and debt-free
It is good sense to buy any farm at or below market price with some interest-free vendor finance. But it is absolutely essential to buy a farm that is going to be profitable. Otherwise debt escalates out of control. That means reviewing past tax returns and verifying them with assessments. Tax assessments are the one document that cannot easily be rigged. Tax returns and financial statements can be completely  false, just typed up for the unsuspecting buyer.  The key to success is having a skilled consultant draw up realistic budgets on the basis that in each decade there might be 3 good years, 3 bad years and 4 moderate years. In the debt repayment period it is best to avoid all capital expenditure so that all profit goes to reduce debt. There is nothing quite as enjoyable as farming debt-free and earning good profits at the same time.