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NAB wants to evict tenants faster than requir -

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NAB wants to evict tenants faster than required

Alison Caldwell reported this story on Tuesday, October 25, 2011 08:21:00

TONY EASTLEY: The National Australia Bank has an advertising slogan which spruiks the line "More
give less take" .

But the Tenants Union in Victoria is concerned the big bank is taking more than its giving.

In the state's Supreme Court, the NAB is challenging the Residential Tenancies Act which requires
renters to be given 28 days notice to vacate a property.

The bank has taken the Sheriff's Office to court after it failed to evict the tenants of two
properties after the owners of those properties defaulted on their bank loans.

Alison Caldwell reports.

ALISON CALDWELL: The court case in Melbourne's Supreme Court involves the National Australia Bank,
Victoria's sheriff and two properties in Melbourne's north east.

The mortgagor of the properties defaulted on their repayments to NAB after leasing the properties
without the bank's knowledge, prompting the bank to seek repossession orders.

The Residential Tenancies Act requires renters be given 28 days notice.

NAB wants to bypass the act.

TOBY ARCHER: There's this nightmare scenario where one day you're sitting at home in your rental
property and the sheriff arrives and says, okay, everybody out, you're evicted immediately.

ALISON CALDWELL: Toby Archer is a spokesman with the Tenants Union of Victoria.

TOBY ARCHER: Essentially they're saying that there is no requirement for them to issue that notice
under the Residential Tenancy Act and that there's no requirement for them to secure a possession
order from VCAT before taking possession.

It's incredibly ruthless and cold hearted for the NAB, one of Australia's big four, to proceed in
this fashion which will essentially evict tenants who have done nothing wrong without any notice.

ALISON CALDWELL: Are you concerned that if they're successful, the NAB's successful, it would set
some sort of precedent?

TOBY ARCHER: Well it would set a precedent here in Victoria because the other banks will say, well
why do we have to go through this process given that we've got this ruling? So it could mean that
every time there's a default by a landlord, that these ruthless banks will just move in without
having any regard for the tenants who just continue to pay their rent.

ALISON CALDWELL: CLSA Australia banking analyst, Brian Johnson says in the current economic climate
banks are trying to balance their housing books faster.

BRIAN JOHNSON: In November 2010 with the Reserve Bank moved up interest rates by 25 basis points
and the banks moved up mortgage rates by 40 basis points, that was like one step too far. And an
increased proportion of households are just having a lot more trouble paying their home loans which
sees arrears rates spiking up.

What banks, I think, are trying to balance is the risk by forcing a property into an accelerated
foreclosure. The risk is that you actually lower the value, versus the risk that prices are falling
anyway so perhaps you should realise the value as quickly as you should.

ALISON CALDWELL: Are we seeing more mortgage stress?

BRIAN JOHNSON: We're seeing a lot more mortgage stress. And the reason is that if you go back to
2009, interest rates were as low as 3 per cent, they're now 4.75 per cent. But on top of that the
banks have fattened their housing margins by about 125 basis points. Which means the move up in
interest rates from the lowest to where we are now has actually been quite significant.

Moody's recently released an analysis of mortgage stress by postcode and it was pretty staggering
the sharp increase in the number of postcodes across Australia which are experiencing mortgage
stress.

So most of the data sets you see across the board point to basically this increasing difficulty in
repaying home loans and arrears rates are heading up.

ALISON CALDWELL: A spokeswoman with NAB says the bank didn't know there were tenants in the two
properties concerned.

The case has been adjourned until Thursday.

TONY EASTLEY: Alison Caldwell reporting.