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Banks Seize Homes From Those Who Ignore Default Notices

The purchase of property is not some­thing that individuals enter into lightly. There are many factors that consumers consider when purchasing a home. And whilst some consumers have the ability
15 Jun 2018 11:02
Banks Seize Homes From Those Who Ignore Default Notices

The purchase of property is not some­thing that individuals enter into lightly.

There are many factors that consumers consider when purchasing a home.

And whilst some consumers have the ability to save up for such a purchase, many may not be able to buy the house of their dreams with­out taking a home loan.

These consumers when taking the home loans have to commit to a repayment time­frame set by the bank.

Repayment details including interest rates and associated fees will be stipulated in an agreement signed by both the financial insti­tution and the consumer.

Consumers can then work towards meeting their financial commitment whilst enjoying the benefits of having their own property.

However there are cases where consumers find it difficult to meet their home loan repay­ments because of unexpected events. When loan repayments are not made, banks issue default notices which if ignored can result in more problems for consumers.

Recently, the Consumer Council of Fiji dealt with a case of an irresponsible consumer who ignored default notices.

Mr. and Mrs. Dan took additional loan on their home loan to build a pool on their prop­erty and to purchase a four-wheel drive.

In addition to their home loan, the couple also had debts with other financial institution to send their children to a secondary school in Australia.

The couple continued making repayments on the property until Mrs. Dan resigned from her job and travelled overseas for casual em­ployment.

Mr. Dan had to oversee the loan repayments in her absence.

However, after a year of making repayments on the home loan through direct deductions from his bank account, he ceased the repay­ments without notifying the bank. He decided to make manual repayments to the bank but failed to do so because of financial constraints.

For nine months, the bank did not receive any repayment for the home loan, with the last payment received recorded in June, 2016.

During the course of nine months, the bank sent default notices along with calls and emails which were ignored by them.

Ultimately, the bank decided to advertise the property on mortgagee sale and an eviction notice was issued on March 23, 2018.

Once the couple received the eviction notice, they attempted to get in contact with the bank and work out a solution. However the bank maintained that the couple would have to va­cate the premises.

Following this, the couple lodged a complaint and sought the Council’s assistance to get more time from the bank to settle their arrears.

The Council cited provisions in the Consumer Credit Act 1999- that consumers can utilize to seek relief if they are facing hardship in keep­ing up with home loan repayments- and re­quested 3 more months be given to the Dan’s to update their home loan payments.

However, the bank stood firm in its decision to decline the Council’s proposal to forestall any further mortgage action. The decision was taken on the grounds that ample time was given to the couple to respond to the default no­tices and other communication asking them to clear the arrears.

In this instance, because they did not comply swiftly with the default notices and they failed to discuss their financial woes, the bank had no option but to evict from their own home.

The property also had immense sentimen­tal value as it was a family home initially pur­chased by Mr. Dan’s father.

The Council would like to remind consumers to honour notices, warnings and correspond­ences from financial institutions reminding them of overdue payments.

By throwing the default notice does not mean the problem goes away. In fact the problem be­comes bigger.

Immediate action on these notices will help consumers to find a solution with the lender.

It is best that they visit the financial institu­tion and speak to a representative to discuss an amended repayment plan to suit their cur­rent financial situation.

These financial institutions should be able to accommodate the hardships faced by consum­ers and tailor-make repayment plans.

It is important that consumers should not take additional loans on their home loan.

The council has noticed that there are con­sumers who take additional loans for family holidays or to buy costly assets that they could do without.

It is better to clear the home loan first to en­sure there is roof over their head.

Consumers can visit the Consumer Council of Fiji for advice if they are facing difficulty with meeting their loan repayments.

Please note that we are now located at Level 5, Vanua House, Victoria Parade, Suva.

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