What to do when you fall behind on your bond repayments
03 November 2017
Ever wondered what to do when you, as a homeowner, find yourself missing payments? We’ve outlined what happens if you miss payments and the steps the bank takes to try and ensure that you keep the roof over your head. Let’s clear up some confusion.
Formal legal action will commence once you have missed your sixth payment. You’ll receive constant communication from the bank up until that point. Remember, homeowners sign a legally binding document that demands repayments on the terms of the bond agreement, in lieu of the funds loaned.
Absa does its utmost to ensure our customers can remain in their homes, and our collection department elaborates on this, “Sale in execution is a last resort, and a right that the bank will exercise in accordance with the rules set out by legislation and the judiciary. If you default on these payments, it’s important to accept that the relationship between the bank and the homeowner has changed. From the bank’s side, we’ll send out letters of notice, send SMSs and make contact calls advising customers of the arrears on their accounts so that clients are aware well before six payments are missed. Once the customer has missed six payments, they’ll receive a letter of demand – which places the customer in default – and the bank will proceed with formal legal action.”
Your first move should be to speak to your bank if you’re going through financial difficulties. Like all financial service providers, Absa is governed by sound principles to recover arrear instalments. However, the bank does have processes and tools available to assist you through the process. Our collection department explains the bank’s short-term solution to help customers going through financial difficulty: The bank has forbearance programmes that it can offer customers based on the nature of their financial circumstances. These are split between Short-Term and Long-Term Plans. With Short-Term Plans, installments can be reduced for a period of six months and potentially extended up to 12 months. Concessions can be to reduce the installment to 25% of the monthly installment based on the affordability of the customer. With the Long-Term Plan, the loan could possibly be restructured. This includes restating the tenure up to 360 months to reduce the monthly instalment. It is dependent on the customer’s meeting affordability criteria and fulfilment of the short term successfully. The bank will further provide assistance with Bank-Assisted Sales, as well as approved private sales of the home.
Only after the above options have not achieved the desired outcomes, will the bank consider legal foreclosure and the option of selling the property through the Sheriff’s Sales in Execution process.
The Banks-Assisted Sales programme is called HelpUSell.
This option will effectively assist you in selling your property for the highest offer possible over an agreed period of time. It allows homeowners to work together with the bank to improve your financial situation by preventing the sale of your house at a Sheriff’s sale in Execution. In time it has become evident that the returns from Sales in Execution have been substantially lower than Private or Bank-Assisted Sales, leaving you, the customers, in an adverse financial position.
The bank is here to help, and will only initiate the foreclosure route after all other options have been exhausted.
The bank will always try to support clients in troubled times. This is however limited to our clients’ willingness and receptiveness to engage and accept the alternative options by working with the bank to reach a mutually sustainable solution. After having tried the above mentioned routes, and only then will the bank call on the judgment and attach the property in question and call on its right to sell the property.
Disclaimer: The advice contained on this blog is for general purposes only and does not take into account individual circumstances, objectives or financial needs. Accordingly, readers are advised to seek appropriate advice from licensed professionals prior to making any investment, or taking up a financial product or service.