Singapore’s United Overseas Bank (UOB) is suing property developer Lippo Marina Collection (LMC) for misrepresenting the sales prices of 38 condo units in Sentosa Cove. According to their lawyers, LMC misrepresented the sales prices by offering excessive “furniture rebates” resulting having the loan applicants awarded a loan higher than the “actual sales price”. For example, a unit was put on sales for S$5.98 million and LMC will give the buyer a S$1.78 million, giving the unit an actual sales price of S$4.2 million. In the meantime, the bank will grant a S$4.79 million loan based off the stated selling price.
In their defence, LMC said that the housing loan is a contract between UOB and the loan applicants and has nothing to do with them especially when it was UOB who did not consider the furniture rebates when issuing a loan.
UOB commenced legal proceedings against LMC when they realize 37 out of the 38 Sentosa Cove units ended up in defaults, and even blamed LMC for hiring fake buyers who did not have the means to service the mortgage to purchase these units.
Singapore banks are currently facing a subprime-like debt crisis as more mortgage owners are defaulting on their payment due to rising interest rates and property speculations. Singapore homeowners took up a dangerous amount of mortgage debt beyond their purchasing power. Bad loans in Singapore have also risen to a 6-year high as manufacturing, oil and gas, finance and the construction industries see drastic slowdown resulted from the recession in China.