Yes Home Loans v AFIG Wholesale [2008] NSWSC 1017

Yes Home loans & a related company have been receiving approx $80,000 a month in trailer commission from GE Money. On 9 July 2008 GE withheld 75% of the trail “as per legal advice”. This came about because some of the originated loans had gone bad and Genworth had refused to make up the shortfall. GE claimed the money pursuant to an indemnity in the correspondent deed.

Our readers may recall a similar situation occurred in Integral Home Loans v Interstar Wholesale Financed [2007] NSWSC 406 and the court found the forfeiture of trail clause was a penalty and ordered Interstar to keep paying trail. This matter was complicated by the fact that GE holds a fixed & floating charge that includes a set-off clause. Thus they were claiming the trail was being applied against the damages rather than having been forfeited. Nevertheless the court granted an mandatory injunction ordering GE to keep paying trail subject to undertakings given by the originator.

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