Can’t pay your home loan? Don't get blacklisted, here's what to do - Finance, Advice
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Can’t pay your home loan? Don't get blacklisted, here's what to do

31 May 2018

For a homeowner there are few financial stresses as serious as struggling to make your monthly bond repayments.

If you cannot work out a financial plan to keep your home, it’s best to put it on the market as soon as possible to recover the costs and settle with the mortgagor (typically the bank) before they take the necessary legal steps involved in foreclosing on a property.

The foreclosure process by the bank can start as early as when the bond holder is two months in arrears. The ideal is to “beat the banks to it” by voluntarily selling your property.
Banks usually consider a property to be “distressed” when the homeowner can no longer afford the bond repayment and has consistently missed the monthly payments.
Strike before the iron is hot
Contact a distressed property specialist when (or before) you default on a payment as they have experience in selling distressed properties and can advise you on the best way to make sure your home gets sold at the best possible price, in the shortest possible time.

If you have built up enough equity, this option means that you may have enough money to pay off your outstanding bond, as well as other debt.

The foreclosure process by the bank can start as early as when the bond holder is two months in arrears. “In the banks’ experience once somebody is more than two months in arrears they are unlikely to catch up again and so they usually begin the legal process,” says William Verster, a certified distressed property expert and principal of Leapfrog Randburg.

The ideal is thus to “beat the banks to it” by voluntarily selling your property, before being forced to do so. It’s an undesirable situation for anybody but it’s important to be realistic and proactive about it, and to seek the necessary help and advice to settle it as favourably as possible.

If a mortgagee alerts the bank, or a distressed property specialist, in time, they can help by selling the property at as close to its true market value as possible and draw on their network of attorneys to negotiate a real and amicable solution to the situation.

The fact is the bank does not want your property and is ready to find a workable solution for recovering the loan, even if this means over an extended period of time. This means that banks may be prepared to refinance the remaining debt, after sale of your property, over an extended period of time, without blacklisting you.

This is by far a more favourable outcome, when you consider that in order for the banks to foreclose on a property and take it to auction they are required to follow the legal process, which involves taking judgement against the owner.

This automatically results in the borrower being blacklisted for up to 25 years, says Verster.

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