A MORTGAGE bungle has wound up in the NSW Supreme Court after lawyers mistakenly discharged the mortgages and titles of three homes to the owners instead of one.
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Citigroup Bank loaned money to Guy and Eunice Wernhard for investment properties in South Tamworth and Raymond Terrace, and their home in Watanobbi in 2005.
When the couple tried to sell the Raymond Terrace home in 2012, Citigroup instructed its lawyers to discharge the mortgage on the property but leave the other two in place to secure the outstanding loans.
Instead, two Tamworth legal firms were given the mortgage discharge forms for the Raymond Terrace property.
But enclosed in the letter from Citigroup's Galilee Solicitors was a handwritten note with the documents for the South Tamworth and Watanobbi properties.
Maclean, Curtis and Daley handed over Certificates of Title for all three properties, together with the mortgages and discharges of mortgages, acting on advice from Citigroup lawyers.
Effectively it released the couple from three mortgages while still owing half-a-million dollars to the bank.
It was four years before Citigroup Bank staff picked up on the costly mistake, by that point, the Wernhards had sold the South Tamworth property they wrongly owned outright, without the bank's knowledge.
Citigroup then demanded the Wernhards reinstate the mortgage over their Watanobbi home, it argued they knew about the mistake when they signed the documents.
The Wernhards refused, but admitted they were aware of the mistake.
"Well no, we didn't expect them to hand over three mortgages," Mr Wernhard told the court.
When Judge Michael Slattery asked why he wouldn't give it back, Mr Wernhard said: "Because we can't afford to, Your Honour".
The couple then made a cross-claim against Citigroup.
The bank had suspended their ability to withdraw from its mortgage accounts.
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The Wernhards claimed it had affected their ability to financially support the Central Coast Community Shed they headed.
They also argued the bank failed to consolidate their loans after 2004 and tried to claim lost income, damages and bank repayment fees.
Judge Slattery denied both cross-claims, and ordered the Wernhards to reinstate an equitable mortgage for the previous loan agreement of $524,000 over their Watanobbi home.
The pair were also ordered to pay Citigroup's legal fees, and remove a caveat on behalf of Mr Wernhard's deceased mother over the property.
The decision was handed down earlier this year, and the Wernhards were given one month to follow the orders.
Madeline Link
Madeline Link is a journalist at the Newcastle Herald, with a focus on Lake Macquarie City Council. To keep up with my stories, follow my Twitter @madeline_link, for tips email madeline.link@newcastleherald.com.au.
Madeline Link is a journalist at the Newcastle Herald, with a focus on Lake Macquarie City Council. To keep up with my stories, follow my Twitter @madeline_link, for tips email madeline.link@newcastleherald.com.au.
