ARTICLE · 27 OCTOBER 2006

Banking & Finance Update, October 2006

Gadens Lawyers

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In this issue: Unregulated loans riskier than UCCC loans?; Can your borrowers repay their loans?

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In this issue

Unregulated loans riskier than UCCC loans?

Can your borrowers repay their loans?

Unregulated loans riskier than UCCC loans?
Article by Jon Denovan

Many lenders go to significant trouble to ensure the loans they make are not regulated by the UCCC. But does this make the loan safer?

I've generally come to the conclusion that unregulated loans secured over the borrower's principal place of residence are often riskier than regulated loans.

The starting point in reaching this conclusion is that all loan contracts are subject to review on the basis that they are unconscionable. That's true for both regulated and unregulated loans. Once a court or tribunal varies or annuls a loan contract because it's unconscionable, the mortgage securing that credit contract and any guarantee are similarly affected.

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