Bank accused of ‘tortuous’ action over mortgage error

One of Australia’s big four banks has been accused of behaving so badly it could amount to torture after it committed an extraordinary series of errors.

It’s a scenario many Australians have dreamt of, a bank error in your favour, with your entire mortgage wiped.

It actually happened to Maria*, but she did the right thing and informed her bank. It was a decision she would live to regret.

Now, eight years later, she is still tied up in never-ending court action that has been described as “disgraceful” and has left her psychologist questioning if it qualifies as “torturous” in a damning letter.

In 2017, Maria had her $700,000 investment loan converted to a home loan. As part of that transaction she requested that a second mortgage over the Brisbane property be released.

But instead, ANZ released both mortgages off the property “due to some error for which” Maria “carries no blame”, a Supreme Court of Queensland judge noted.

It wasn’t until Maria was trying to sell the property 14 months later, that she realised the bank’s mistake.

She immediately informed the bank, prompting ANZ to lodge a caveat over the property. A caveat is a warning attached to the title of a property flagging an interest or claim on that property.

That caveat lapsed in March 2019, and nothing happened for more than a year and a half.

The house in dispute is located in the Brisbane suburb of Norman Park. Picture: Jeff Greenberg/Universal Images Group via Getty Images)

A MYSTERIOUS LETTER

Then, a mysterious letter from an anonymous person claiming Maria was on the verge of selling the property saw ANZ launch legal action in January 2021.

ANZ claimed the matter was so urgent they couldn’t inform Maria that the case was in court.

Maria said the case has taken a devastating toll on her both mentally and financially.

“I haven’t been able to do anything for years because I’ve been trapped in this situation and I think that the misbehaviour of the bank has been instrumental,” she told news.com.au.

“This is what they do to people who stand up to them or found out they made substantial errors – they just want people to give up or to go away or die.”

To make matters worse, Maria claimed ANZ accused her of trying to defraud the bank, which she found upsetting as she had done the right thing, and told them about their error.

As a result, the 70-year-old is experiencing severe anxiety, stress and depression with “pressure coming from the bank” cited as the probable driver of her poor mental health, according to medical professionals.

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ANZ has been pursuing litigation since 2021. Picture: Lisa Maree Williams/Getty Images

MORE: Home loan trap taking years to escape

A letter from Maria’s treating psychologist, sighted by news.com.au, sees the medical professional question if there is “a prolonged pattern of vexatious, callous, harmful treatment” adding “this would be rightly called abuse”.

“Beyond a certain point it might even be categorised as torturous to one’s physical and mental health,” he wrote in the letter, which was supplied to ANZ.

“I ask that it be considered whether or not the consequences of further delays, disruptions, or extensions to these legal matters (combined with what has already transpired) could or should similarly categorised. I pose the question here, though I will not presume to answer it.”

Maria said there had been no meaningful movement on the case since 2022, leaving her in limbo.

A Queensland mum is battling to save her home. Picture: Supplied

A LITANY OF ERRORS

This wasn’t the first mistake ANZ had made. Maria claimed there have been a series of bungles from ANZ since she first took out the loan 17 years ago.

She said the bank had registered a mortgage against the wrong address over four different loans.

“ANZ took a legal mortgage on a property when their loan documentation said something different and ANZ said it doesn’t matter what the street address is – it’s chaos,” she said.

It had also taken ANZ eight years to release a mortgage when she had refinanced and the new loan had paid out the first mortgage.

The 2017 loan was also approved despite her failing the credit check as she neared retirement but they “bypassed their own systems”, Maria claimed.

The loans were also offered under a ‘breakfree’ package, which saw ANZ stung with a $25 million fine in 2022 from the Federal Court, for misleading customers and failing to provide promised account benefits.

The court found ANZ failures impacted 689,000 customer accounts for over 20 years.

As a result, the bank was ordered to pay $211 million in remediation to impacted customers, but Maria said she was given the joke sum of 74c as compensation.

Meanwhile, Maria said ANZ insisted she sign a new mortgage document in 2019 but given all the “lies and promises” she refused to do it without legal advice.

She was initially told ANZ would pay the fees and to obtain a quote from a solicitor, which was $10,000. But Maria claimed when she sent the quote through, ANZ backflipped – denying it ever made the offer and offering just $1000.

“I didn’t know what to do but I wouldn’t sign that. I was not going to sign that mortgage document without legal advice as I just don’t feel comfortable and I left it at that,” she said.

ANZ copped a $25 million fine in 2022 over a mortgage package called breakfree. Picture: istock

LEFT HIGH AND DRY

The court action has been crippling for Maria.

She said she had been financially decimated by the legal proceedings using all her super to fund parts of it and borrowing $20,000 from a friend.

The Queensland woman’s legal bill already sits at $300,000 and she is worried if she loses the case that ANZ will seek their costs be paid by her.

“My lawyers insisted on putting a mortgage over an old house that I’ve had for over 25 years to guarantee their fees,” she added. “I never thought my bill would be anything like that.”

She said her lawyers suggested selling the house recently to pay barrister fees.

“That’s the only house I will have to live in,” she said.

“ANZ are just waiting for me to lie down and give up and I lose everything because of them. They have tried to paint me as a fraudster. It’s serious and it needs to be exposed.”

Two masted sailing boat moored in the Brisbane River in front of the million dollars mansions of the Eastern suburb of Norman Park, Brisbane, Australia. Picture: Alamy

SOARING DEBTS

Maria said despite multiple requests, ANZ hasn’t provided a signed copy of the original mortgage. She hasn’t made any mortgage repayments since 2019.

The mortgage now sits at around $800,000 as the interest being charged by ANZ racks up, she said.

While the Brisbane home has now soared in value to $1.8 million, she said by the time she paid off all her debts she would have nothing left.

“I have not been able to sell my house. If would have sold it without worrying about letting them know about the mortgage, I would have been committing a crime but I haven’t done that,” she added.

ANZ has been accused of a brutal pursuit of the case. Picture: NCA NewsWire / Damian Shaw

BANK’S ‘BRUTAL’ PURSUIT

She claims ANZ have been “brutal” and have refused multiple requests for a settlement conference.

Maria’s psychologist’s letter adds she has had a “heightened sense of injustice and victimisation” as judges have questioned parts of the litigation.

“There is a fear that these proceedings are being ‘strung along’ by my patient’s legal opponents as a tactic to deteriorate her mental health to such an extent that she, in effect, surrenders and agrees to an unjust compromise of the legal action. If this was the case, one would hope the justice system would not tolerate such a situation,” the psychologist adds.

Supreme Court of QLD’s Justice Glen Martin described some of ANZ’s pleadings as “bold and adventurous … but entirely misconceived” and “may just be examples of a plaintiff wanting to get its retaliation in first”, in a Judgement in 2021.

Maria said the psychologist’s letter prompted ANZ to finally agree to a mediation to be held on April 30.

But she feels like her “head is spinning all the time”.

“I don’t sleep much at night. I’m up at 2am, 3am or 4am, I’m waking up and I’m thinking about this,” she said.

“I have worked so hard all these years and to have a bank come along and do this to me is absolutely disgraceful, it’s wrong and it’s only about profits.

“There has been systematic failure all the way through and its not as if it’s one loan. All the loans have been part of breakfree package, which was part of the ASIC case.”

Brisbane River East Brisbane with Norman Park waterfront residences. Picture: Jeff Greenberg/Universal Images Group via Getty Images)

NOWHERE TO TURN FOR HELP

Originally, Maria’s son was also a part of the court proceedings too as he had lent his mum $70,000 for renovations and they had registered his interest against the property.

He is no longer a defendant in the case but said there was “incompetence” and a “lack of integrity” from ANZ. He added the bank also refused to engage in AFCA proceedings, an external dispute resolution service.

“Literally the bank can bully people into court and refuse to use a mediation or conciliation service,” he said.

“All of a sudden there is extra debt that has arisen from ANZ’s conduct and … they are basically holding her hostage.

“ANZ has made an epic error in not securing the loan and allege fraud and misconduct and the judge stated that basically they were trying to staunch their wounds that were self inflicted in an embarrassing way and were now out to get revenge.

“I think if they can put a mortgage on wrong property with one customer how many other people have mortgages on their properties which aren’t meant to be there?”

Greens MP Max Chandler-Mather wrote to ANZ about the “alleged misbehaviour” of ANZ and noting Maria was in “severe financial and emotional distress”. However, ANZ never responded.

An ANZ spokesperson said it is unable to comment on individual customer cases.

“ANZ takes its responsibility to customers seriously and always seeks to act with integrity,” they added.

*Name has been changed

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Originally published as Bank accused of ‘tortuous’ action over mortgage error