Foreclosures

They do occur in Australia. I have one client who is currently being foreclosen upon in about 3 weeks. (She is beyond help loanwise).

I think you will find that these mainly go to Auction, and they generally do not advertise that they are foreclosures. So they should be selling for market price, which makes it hard to find a bargin.

Terryw
Discover Home Loans
North Sydney
[email protected]

Mel,

The property has to sell for market price anyhoo, so even if she has to sell (bank demand), she’ll get the same price anyhoo, one might imagine (hope for her sake).

kay henry

Terry,

As a matter of interest, what happened that this woman can’t hold her properties anymore?

I ask this, not because I see $$$$ in my eyes due to someone else’s misfortune [hmm] but because I think it might be interesting for the forum to understand how sometimes, it can all go wrong.

We’re all happy to discuss our great CG’s, and how super-rich we are due to the RE boom… but obviously, the boom and having coastal properties, has not been enough to save this woman’s financial situation.

Did she lose her job and was unable to get another? Have significant health problems and be unable to finance? Was she over-committed? Did someone rip her off?

I know you’re gonna protect her privacy and not play into the “blood on the streets” stuff that sometimes we see on here, but I am wondering why she has to give up what she’s probably strived so hard to get?

kay henry

I have just written an article about this. Due for release in the Sept issue of API. It’s about debt mgt, what to do before you borrow and what happens if things go wrong.

From my research people have plenty of opportunity to manage their finances once they get into trouble to avoid the situation where the bank forces them to sell. The whole process normally take 4 – 6 months before the bank says “sell now!”.

Just to be a bit of a loan nerd… foreclosing is where the bank transfers the ownership of the property into their name and the holds onto it. This rarely happens. Normally they just take possession and appoint a local real estate agent to sell the property.

Cheers

Stu

Mel

The law stipulates that there are three prerequisites that must be fulfilled before the lender is allowed to take possession and sell your property.

1. There must be a default (either through non-repayment of principal or interest or not fulfilling another provision contained in the mortgage contract);

2. A notice must be served to the mortgagor requesting the default to be remedied (e.g. repayment of overdue amounts). The mortgage documents will set out how the notice is to be served; and

3. The default must continue (without remedy) for a period of 30 days or one calendar month from the service of the notice.

However, in reality, lenders will work with a borrower for many months before they decide to sell your property.

Cheers

Stu

I don’t want to say too much, but this person had just overcommitted by buying too many properties too quickly (even not having deposits did not stop her). The market just turned a bit too quick. She has not got a job and has not even made one payment on some of her loans, ever!

On the positve side, she has fairly large amount of equity across her portfolio, and is not overly worried. (btw, she came to me after getting into this mess).

Incidently, I know a second mortgage lender that is suing a major bank and a valuer over a recent forclosure sale (ie the bank allegedly sold too low, and the valuer valued too high).

Terryw
Discover Home Loans
North Sydney
[email protected]

Actually Aceyducey it is very unclear if a bank has a duty of care to the borrower. There is a lot of evidence that they don’t. Hence, they can sell less than fair market value. Let’s not forget – they are a motivated seller!

Kay – I have tapped your house and wired your brain. I know everything you do and think about. Luck for you that I don’t article articles about all your thoughts!

Cheers

Stu