FNB’s Product Head of Home and Structured Lending, Mfundo Mabaso, answers the most frequently asked questions around the sensitive and emotional issue of bank repossessions and addresses how banks can help when you need to sell due to financial difficulties.
Q1: At what point would a home loan provider approach a client to assist them in selling their home, be that skipping one or more payments or the bank being aware of financial difficulties?
Home loan providers need to inform their clients that they are in arrears. This will occur during an initial discussion with a client who has reached that point. While discussing the circumstances that led to the situation and the various options available to the client, the home loan provider will also inform the client about the bank-assisted sales programme and the benefits thereof. It is an option that is always available to the client during the collections process, so it’s reiterated.
Q2: What is the objective of the bank in an assisted sale: to recover what is owed or to realise some profit for the client?
The objective is to assist the client to obtain an offer that is related to the market value of the property. At FNB we have a solution called QuickSell®, which assists the client with the sale of their property through reputable estate agents, a discount on any shortfalls, and endeavours to assist the client to recover from whatever financial difficulty they are facing.
Q3: What is the process that is followed in a bank-assisted sale?
The client will need to sign a mandate acknowledging that the bank can assist them to market the property. A valuation is done by a sworn valuator and the client is made aware of the market value of the property. FNB properties are marketed on the nav»Home marketplace as well as by other estate agents and property websites, to garner the best offer for the property. The offer is then presented to the client for acceptance.
Q4: Can a client approach their home loan provider for an assisted sale even if they are not in debt or financial difficulties?
Yes, they can. If the client opts for the bank-assisted sales programme, there are many ways to assist them. The bank uses the best agents and websites to market the properties, so the client’s property will receive high exposure in a short period of time and may be sold faster than other sales methods.
Q5: Does the owner have to accept the offer?
Yes, they do, provided they are satisfied with the offer. This is why there is a heavy focus placed on ensuring all due diligence is followed to ensure a fair and appropriate market price is achieved for the property and the client.
Q6: At what point is the client’s home repossessed?
A repossession of property is always the last resort. Before it gets to that point, FNB explores all possible alternatives with the client, including repayment arrangements and even debt consolidation and restructuring. If these efforts fail, and the client continues to fall behind, the matter may proceed to court.
A repossession is also known as a Sale in Execution (SIE) where a property is sold by a Sheriff of the Court, based on a court order. It’s important to note that the bank cannot unilaterally decide to sell a property or set the selling price. The process is overseen entirely by courts. Properties sold through SIE are often not sold at market value. A number of factors can influence the purchase price, including the condition of the property, whether it is vacant, any outstanding rates, levies, or taxes, and broader market or area dynamics.
The court may set a reserve price, the minimum amount the property can be sold for. The Sheriff cannot accept offers below this price unless the court amends the order to lower the reserve price or remove it.
Q7: When in repossession, can the client still live on the property?
If a property is sold at a SIE, the current owner (the one selling) may live on the property until the process is completed and the house is sold. Once the property is sold and ownership is transferred to the new buyer, the previous owner (client) is required to vacate the premises. The bank is not a party to negotiations between the new owner and the previous occupant regarding vacating the property.
Q8: Where are homes undergoing (or on) auction advertised?
Upcoming SIEs are published on local Sheriffs websites. These are also published in the Government Gazette and local newspapers. FNB adds a further layer, which is to market upcoming SIEs on the “My Roof” website. If a property is repossessed by FNB it is marketed on nav»Home, estate agents are informed, and various other websites are also used.
Q9: What is your advice for clients who anticipate financial difficulties that will impact their ability to pay their home loan installment?
It is advisable to contact your home loan provider immediately so that specialists can review your financial circumstances and help you navigate through your financial difficulties. FNB clients can make repayment arrangements via the FNB App or communicate via Secure Chat. FNB’s recommendation is to speak to your home loan provider even if you suspect that you may be facing financial constraints in the near future. To avoid reaching this point, it is advised that during your home loan term, you pay extra towards your repayment so that you build a buffer for any future unexpected events.
