Don’t let your property be a Mortgagee Sale! – 'Mortgage in Possession’

Firstly, most homeowners in Australia have a mortgage with a banking institution.   The bank is referred to as the mortgagee whilst the borrower is known as the mortgagor.  A mortgagee takes a mortgage over the property to secure the loan.  When a mortgagor defaults on their home loan, the mortgagee (bank) is given the right to repossess the secured property.  These rights are always pointed out within the terms and conditions given when lending money for a home.  It is essential for every new homeowner to carefully read their rights and obligations.

1. A Mortgagee Sale (Mortgage in Possession) is something that happens when a property owner defaults on their home loan.

A Mortgagee Sale, also known as ‘mortgage in possession’ is something that happens when a property owner defaults on their home loan. In other words, it’s when your mortgage lender decides to take possession and sell your property instead of foreclosing on it. The lender can only do this if you’ve failed to pay them and they have gone through the legal process required to have ownership transferred from you to them.

A bank is not allowed to just to come and take your home without warning in these circumstances.

2. The banks start the process by issuing a letter of demand to advise the property owner that they need to make their loan repayments.

A letter of demand is when a lender sends you a formal letter asking you to rectify a late loan repayment as soon as possible.  In the context of a home loan, this may occur after you have missed the deadline for repayment but before the lender sends you an official default notice.

3. If the owner does not reply or take action and continues to default on their loan repayments, the bank will issue a letter or notice of intention to sell.

After the letter of intention to sell is issued, time is ticking for the borrower. There are only 21 days from when it’s received until your property can be sold at auction – either publicly or privately through a broker.

The number of days starts from when you receive your first letter of intention and then increases by one day for each additional letter that comes through after that (for example: if you receive two letters within one year, there will be 41 days between receiving those two letters).

4. As an owner, you would receive these letters from your bank. Unfortunately, sometimes people ignore these letters or mail from their bank assuming it will just go away. This is where things start to get serious.

If you ignore these letters, this is where things start to get serious. The mortgagee sale process (mortgagee in possession) can take months and may end up costing you thousands of dollars in legal fees and other costs associated with selling a property at auction.

If you receive a foreclosure notice from your lender, please do not ignore it! You need to contact them immediately to discuss the situation and find out what options are available for preserving your home through a loan modification or other options that may include repayment plans that could reduce the amount owed on your mortgage loan balance.

5. After a certain amount of time has passed with no action taken by the property owner to settle the defaulted payments, the bank will then progress towards a mortgagee sale and it will be a Mortgage in Possession, which is essentially a forced sale of your property by the bank.

However, before that can happen you need to be aware that there are two ways in which you are able to stop a mortgagee sale from taking place:

• You can pay back the debt and avoid having your home sold off. This may seem obvious but it’s important to remember that this option is available even after the auction process has begun. If you have been unable to make payments on any past due amounts due through hardship or unforeseen circumstances, contact your lender immediately and discuss how they might be able to help resolve this issue so as not to lose ownership title over your home itself!

• You can negotiate with them directly beforehand – ideally in writing via email. This will allow both parties time to consider their options before coming together later on down the line when everything becomes finalised; either way though – always make sure someone else knows what’s happening too because otherwise, nobody will ever know where any legal documents go once signed off…

• If you could not make any suitable arrangements with the bank, the next step is for the bank to advertise your home for sale through auction. This is called “publishing” and it means all potential buyers have been warned about what’s happening with your property so they can decide if they want to bid in an auction.

6. The mortgagee is required to comply with the requirements set out in the Property Law Act 1974 (PLA). A mortgagee cannot exercise its power of sale unless or until:-

1. Default has been made in payment of the principal, interest or any part of the loan;
2. Notice requiring payment of the failed payment which constituted the default has been served on the mortgagor; and
3. Default has continued for 30 days from the date the notice was served.

If there is any evidence to suggesting the sale has been ‘rushed’ or the property has not been adequately marketed, this may be grounds for the mortgagor to seek compensation from the mortgagee.

7. If you have just discovered that your property is going through mortgagee sale proceedings, it’s important to act quickly as this could lead to problems down the track if you leave it any longer!

It’s easy to ignore the letters from your bank and think that they’ll go away. However, ignoring them only makes things worse for yourself in the long run. You must act quickly and contact your lender to find out your options.  

The unfortunate reality is that this can often mean paying more than what was originally asked for or losing your home altogether if a settlement cannot be reached within a given time frame (around 60 days from when an application was made).

8. This can be distressing for people when they find out that this is happening. Sometimes people don’t even realise it’s happening until they receive a letter or phone call from someone saying they are coming to inspect your property!

The first thing to know is that if you are in default, the bank will send you a letter or notice of intention to sell. This may come as a shock because it can be distressing for people when they find out that this is happening. Sometimes people don’t even realise it’s happening until they receive a letter or phone call from someone saying they are coming to inspect your property!

The second thing to know is that if your property does go through Mortgagee Sale, there will be no guarantee that it will be bought back by the bank. This means that if the property goes on auction, then the new owner could be anyone – and not necessarily the bank who owns your mortgage (unless they happen to bid on it). If this happens and someone else buys your home at auction, then unfortunately there’s nothing else that can be done.

Conclusion

After reading this article, hopefully, you have learned more about what a mortgagee sale or a ‘Mortgage in Possession’ is and how it can affect you and your property. If you have just discovered that your property is going through mortgagee sale proceedings, it’s important to act quickly! At No Agent Property, you can list your property for sale at market prices and deal directly with buyers that are interested in your property.  You have even have an auction as No Agent Property can provide experienced auctioneers.  There are no commissions to pay, no catches, just a small advertising fee to get your property listed on the largest sites that buyers go to.
Sites like:

• – Realestate.com.au
• – Domain.com.au

And many other sites.

If you can’t afford the advertising fee, then we have you covered with Zip Pay.  This means you can advertise now and pay later.

For just around $700.00 – $800.00 we can make this all happen for you.

Interested:  Fill out this form and one of our consultants will be in touch.