What to Do If Your Bank Wants to Mortgagee Sale Your House
When a bank lends you money to buy a home, the bank secures a charge over the property. Upon full repayment, the lender discharges the property. However, if you fail to make payments, the lender can take possession of the asset and sell the property to settle the loan.
Mortgagee sales are often stressful. It is not in the best interest of a lender but a last resort to recover a loan. This is partly why lenders have a robust screening process and in many instances propose various insurance products.
Nonetheless, there are instances when push comes to shove, and a mortgagee sale is inevitable.
Below is a brief outline of the mortgagee sale process, and what you should do.
The Recovery Process
The lender will not take your property to mortgagee sale your home after missing just one payment. Lenders are obliged to go through a rigorous process of requesting, negotiating and demanding payments. Consistent non-payment will see the lender first write a letter of demand and follow up. If you don’t pay, the lender will engage the Property Law Act 2007, and serve you notice.
What to Do if You Get a Property Law Act (PLA) Notice
If you’ve received a PLA notice, it means that you have not been servicing your mortgage satisfactorily for a while. It should not be a surprise. Nonetheless, it is very distressing.
A PLA notice contains details of the default and a demand for payment of the mortgage by a specific date. Lenders serve PLA notices in person. However, if you are unreachable, the lender has the option of making it public in a newspaper.
If you fail to pay by the stipulated date, the lender has the right to repossess and sell the property to recover the debt.
But the situation is not beyond salvage. Here’s what you should do.
Don’t Ignore the PLA Notice
Upon receiving the PLA notice, the threat of losing your hard-earned home is real. So, don’t ignore or belittle the damning situation. Take action.
It is advisable to first seek legal advice from a suitably qualified professional e.g. an experienced lawyer or legal representative. She will explain what a mortgagee sale means, the legalities of the mortgagee sale process, and the lender’s rights as well as your rights. Under the Land Transfer Act 2017, you can modify the terms of the mortgage.
Reach Out to a Mortgage Broker and Review Your Financial Situation
Mortgagee sales are an outcome of home loans gone bad. Therefore, it makes sense to include a mortgage broker in your list of people to consult. After all, they are the mortgage experts.
Discuss the circumstances of the current loan exhaustively and lay bare your financial position. It will give the broker tools to craft a rescue plan.
Hatch a Bespoke Mortgage Rescue Plan
Armed with information about your lender, the loan and your financial position, the broker will work with you to hatch a mortgage rescue plan that fits you.
A mortgage rescue plan is not an easy way out of a mortgagee sale. But it is workable and will be your best chance to salvage the situation.
Contact the Lender and Offer Solutions
Although the lender is not obliged to accept the proposed mortgage rescue plan, remember their primary intent is recovery, not to mortgagee sale your home. Lenders will often pay more attention and consider solutions offered via professionals such as mortgage brokers or lawyers. A listening counterpart is crucial for fruitful negotiations towards stopping the mortgagee sale.
Stick to the Rescue Plan
When you agree with the lender, and mortgage broker or lawyer over the recovery plan, set it in motion and stick to the plan. Your home and sanity depend on it.