Mortgagee sales hit record levels

Tuesday 13 March 2012

Mortgagee sales disputes are at record levels and remain the largest single cause of complaint to the Banking Ombudsman.

By The Landlord

Ombudsman Deborah Battell says New Zealanders need to be aware of what might happen if they can't service their mortgage payments and how they can help themselves.

To raise awareness around the issue the Ombudsman has released a guide to mortgagee sales which outlines how the process works, what a banking service provider is entitled to do and what steps a customer can take to avoid getting into difficulty.

"This guide couldn't be more relevant right now, given the continuing record number of mortgage finance disputes we're receiving and predictions that this situation may continue for another two years," Battell said.

She said that since the start of 2011, the Banking Ombudsman Scheme has referred 512 complaints and enquiries about mortgagee finance to the banks for initial resolution, of which 118 have so far resulted in a request for the Ombudsman to investigate.

Mortgage finance disputes now account for 40% of the Ombudsman's workload compared to 17% in pre-global financial crisis times.

The Ombudsman's Quick Guide to Mortgagee Sales covers what happens before a banking service provider can sell a property under mortgagee sale to recover debt, outlining options a customer might have to get out of difficulty and what they should do to protect themselves.

"Ultimately, banks aren't in the business of selling houses and typically both customers and banks lose out in a mortgagee sale. Banks are more likely to want to help customers find other ways to meet their loan obligations before resorting to a mortgagee sale," she said.

"It's therefore important that customers talk to their banks about their options early, before the situation becomes irreversible."

The Banking Ombudsman's Quick Guides are available online at: http://www.bankomb.org.nz/Publications/Quick-guides

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