When the bank comes knocking
Trust not tomorrow – for we live in the present
I have always felt that mortgagee sales are very sad for all of those involved.
It is usual for Banks to give mortgage repayment defaulters time to sell their home so as to save face and avoid the stigma of having to sell their home by way of a “mortgagee sale.”
A Mortgagee sale happens when the bank or mortgagee steps in and forcibly sells a property when the owner has not paid back their debt that they owe on the property.
Banks know that they have a moral and legal obligation to help resolve any repayment issue, but when an owner fails to respond and ignores any request to pay they will step in and proceed with a Mortgagee sale.
Covid-19 and the resulting after effects of job losses could be an example when property owners are sometimes faced with no choice but to sell if they cannot find work to carry on paying their mortgage.
Many will try and sell or downsize their debt in any way they can when the going gets tough but there are some that will ignore the signs and bury their head in the sand. They might have too much debt and emotion tied up in the home to even think straight.
It is fair to say that nobody wants to put a family on the street.
The Real Estate Agents that are given the Mortgagee sales are under instruction to get the property sold, so are merely doing their job which will not be easy as we are all humans.
Sometimes, in the course of their marketing, the property owner will come up with the repayment and pay their debt, and the Mortgagee sale will not go ahead.
Purchasers often will bid for a Mortgagee sale, having not been able to check the condition before the property settles.
There have been some cases where purchasers are faced with having to move an unwilling occupant before they can move in, as there is no guarantee that the house will be vacant on the day that they are due to take possession and often a court order has to be sought to get vacant possession.
It is also quite common for a purchaser to find that many chattels have been taken or the property has been damaged in some way so buying a Mortgagee Sale is also known to have potential risks attached.
Mortgagee sales are offered under different terms and conditions
As the mortgagee (Bank or Lender) is not the owner of the property, it offers the property for sale under different terms and conditions.
For example, most mortgagee sales are not offered for sale with vacant possession and do not include chattels in the sale.
The mortgagee ( Bank or Lender) generally does not give warranties regarding building permits, Code of Compliances or boundaries. These are just some examples.
A current registered valuation is generally sort by the bank or Lender to establish a fair market price.
The full sale conditions are contained in the sale particulars and conditions of sale or the tender/Auction documents.
Prospective purchasers should obtain a copy of these from the real estate salesperson and familiarise themselves with the conditions of sale before attending the auction or submitting a tender.
If you do not understand any of these conditions or are unsure on any matter, it is important that you consult with a solicitor.
Remember it is also the customer’s responsibility to have researched the property fully and satisfied themselves in all respects with regard to the property.
Can a mortgagee sale property be withdrawn prior to auction or closing of tenders?
The mortgagor ( property owner) has the right to repay their mortgage, on terms satisfactory to the mortgagee ( Bank or lender), prior to the property being sold, so therefore it is quite common that a number of properties offered for sale on behalf of a mortgagee (Bank or Lender) are withdrawn from sale.
It is important to note
Some people think that they can walk away from the debt if the Mortgagee ( Bank or Lender) sell their property, but the fact of the matter is that they remain liable for the debt to the bank, as well as for all costs associated with the property (such as rates, insurance and maintenance) until the property is sold and settlement has taken place.
Sadly, if the sale price is not enough to repay the entire bank debt, then they are liable for the outstanding balance.
And finally, if no agreement can be reached with the bank about repaying the balance, the bank can then take recovery action that can ultimately result in their bankruptcy.
Lastly, remember that if the council rates are not paid in some countries, then the council can notify your Bank or Lender to make this payment on your behalf.
Failing this, they can then seek remedy which could involve selling your property in any event to recover the unpaid rates.
No matter how long you have travelled in the wrong direction, you can always turn around