The AFR is reporting that Deposit Power, which which provided interim finance to property buyers, has closed its doors leaving an estimated 10,000 residential, commercial and property investors in the lurch about the fate of nearly $300 million worth of deposits.
This is after the collapse of New Zealand’s CBL’s insurance, which was an issuer and guarantor of deposit bonds.which provided interim finance to property buyers, has closed its doors after the collapse of New Zealand’s CBL’s insurance, which was an issuer and guarantor of deposit bonds.
Deposit Power had links with most of the major property broker networks, including Mortgage Choice and Connective, and major banks through their broker networks.
There are fears that the status of existing deals – which used the deposit bonds as a form of bridging finance for up to 48 months – could be jeopardised by the collapse of the insurance company.
Worried mortgage brokers, who recommended the products to clients, are seeking advice on whether clients need to buy other cover, or secure additional or replacement financial risk bonds.
It could mean unspecified risks, uncertainty and deal delays for tens of thousands of counter parties, financiers and their representatives, including lawyers and other brokers.