The ins and outs of the repossession process in South Africa
We all know that life can sometimes throw us some curveballs. Therefore, when you are struggling to pay your monthly instalments on your home loan, the banks in South Africa have several solutions they can provide you with in order to help you, it’s just up to you to pick the best one depending on your current circumstances.
All banks say that repossession is their last resort, and that they will always try and help you in order to keep your house. But if you have no option as to sell your house the financial institutions in our country offers different services that are available to you in order to help you with the selling process, for instance Absa offers “Help you sell”, FNB offers “Quick Sell”, Nedbank offers “Assisted sales programs” and Standard Bank offers “Easy-sell”. If you are in need of any of these services, the best option will be to come in contact with you bank, and find out how they will be able to assist you in selling your house, and what the best option will be for you.
Although Investec does not provide the same services as the other financial institutions they do however encourage distressed homeowners to sign a special power of attorney over to them so that they are able to sell the house on your behalf through a private contractor or through an auction. By following this route, you will be able to obtain a better price for the property then you would through repossession.
Amos Kahn is the head of legal recoveries at Nedbank Home Loans and he stated that Nedbank provides distressed home owners the following options in order to help them.
1. Catch up as quick as possible:
If you have missed several of your mortgage payments and you are in the financial position to catch up with your payments, make all the necessary arrangements with the bank that suits both you and the banks requirements and make sure you catch up with the payments you have missed. If you make and arrangement the bank is able to help you by giving you several options that will benefit both you and the bank but if you do not make any arrangements, then the bank will assume the worst and take other measures that can have been avoided to start with.
2. Catch up over a period of time:
If you are unable to catch up on the mortgage payments you have missed, but you are able to make regular payments, you can arrange with the bank to restructure your account over a longer period of time, thus allowing you to pay your mortgage as you have always done.
3. Sell your property:
If you are unable you afford the reduced instalments that have been arranged, Nedbank offers an Assisted Sales Program. The program helps you with the marketing and selling of the house though real estate agents across the country thus giving buyers the opportunity to purchase houses that are value for money at realistic prices. By making use of the assisted sales program Nedbank’s main goal is to sell the property as quick as possible in order to help you avoid any further losses or stress.
4. Go for debt counselling:
Nedbank provides advice to clients in distress and advise them of their rights they have under the National Credit Act when approaching a debt counsellor within certain period of time. Amos Kahn says that Nedbank actively participates in and supports debt counselling arrangements thus being in the position to help distressed clients in the best way possible.
If you are a client in distress and you are unable or unwilling to sell with the help of the assisted sales program. The bank will have no choice but to put a limit on all of your losses anywhere they can as this also involves selling the property through a foreclosure process.
The foreclosure process is known as n legal process that involves the summons that are issued and served, judgement is taken and the property is declared executable and then the property is ultimately sold. Before foreclosures takes place the bank has a process to follow, such as first having to contact the distress client numerous time in order to inform them of the foreclosures before it can start take place. The bank needs to enter into a detailed conversation with the distressed client in order to ensure that the client is aware of what is happening and understands what everything means, thus using the opportunity to inform the distress client on the various actions they are able to take such as catching up with their payments, making other arrangements in order to catch up as well as going though debt counselling.
Once the bank has gone through the whole process with the distressed client, and have come to the conclusion that the client is not able to rehabilitate their loan the bank will follow the route of foreclosure.
The bank will get attorneys to issue summons to the distressed client that is delivered though a sheriff to the clients chosen address. An application to the high court will be made in order to allow the property to be sold. During this a judge will go through the application in order to make sure that all of the correct procedures have been followed by the bank. If the judge approves of the application and the processes that have been followed, the sheriff sets a date for the property to be auctioned off. The bank will then do calculations in order to determine the market-related rice of the property in order to determine the maximum price that needs to be received during the auction in order to pay off the loan. If the calculated reserve price is not met, the bank will buy the property from the distressed client and sell the property on an open market by making uses of the real estate agents. Once the property is eventually old, the proceeds are then transferred to the distressed client’s account, minus the money that is owned on the loan and if there is a shortfall the amount will be collected from the distressed client.
