Homeowners who are financially distressed must approach their banks before they default on their bond repayments. This way, payment terms “beneficial to both parties” can be arranged, says Andrew van der Hoven of Standard Bank’s home loans division.
Absa’s Mbuyiselo Khumalo says time is of the essence in developing viable solutions in partnership with the bank in an effort to try to address the situation.
“The customer should always keep in mind that they have a legal obligation to fulfil the terms of the bond agreement, and that they remain responsible and liable for any outstanding balance on their home loan account.
“Remaining silent or avoiding the bank can be the most detrimental approach under the circumstances.” Absa is committed to working with their customers to help them keep their houses. However, monthly defaults coupled with failure to address the arrears situation results in an unfortunate situation when the relationship between the bank and the homeowner takes an adverse turn, Khumalo says.
“The sooner a customer advises their bank about their financial situation, the sooner the bank can work with the customer to explore viable options for the period in which the customer finds themselves under distress.” Khumalo says: “The overriding aim is to help the customer keep their house.”
Van der Hoven says: “We have one simple rule: we will do all we can to keep you in your home.” Customers in financial distress should also know that selling through an estate agent is more financially advantageous than a sale through a court sheriff, who does not have the client’s welfare at heart.
“Furthermore, this programme ensures large legal fees are not incurred. “Best of all, customers will have no judgement against their credit record. “Often the homeowner can find a potentially more affordable home or rent until they their finances recover. “They then can reapply for a new home loan,” Van der Hoven says.
Bank-assisted preferable
It’s best to avoid a sale in execution. Picture: Supplied
Most banks have assisted sales programmes which Absa’s Mbuyiselo Khumalo says help customers to sell their property for the highest offer possible in an agreed period.
“It allows homeowners to work with the bank to improve their financial situation by preventing the sale of the house at a sheriff’s sale in execution.”
Homes sold via these sales – and private sales – have been shown to fetch higher prices than sales in execution at a sheriff auction, he says. Should the property not be sold within the agreed period, the foreclosure process will follow.
“Banks would prefer to assist customers with their short/long-term plans or assisted sales programme, and will initiate the foreclosure route only after all other options have been exhausted.
“The flow of events up to this point is dependent on the customer’s willingness and receptiveness of the other options by working with the bank.” Only after following these routes will the bank approach the courts