How to help your client in mortgage stress
Posted on 27 sep 2017
Why should you help your client?
It’s a good question, many financial specialists have their own problems and don’t want to be tied down with a past client in financial trouble who won’t make them any money. However, it pays to help your client, this is why:
- Happy clients are happy referral ports for your business
- If your client's mortgage falls in arrears, this could mean the loss of trail income. come
- Expand your knowledge of hardship and builds on your own skill knowledge
- Most importantly, it's good business to do the right thing
How to help your client
Contact your bank. By the time your bank reaches the foreclosure stage they have attempted to contact you many times. Rightly or wrongly their perception will be you are avoiding contact in order to avoid repaying your loan. In most cases, your bank will be willing to dialogue with you for a compromised plan to have your mortgage back in order.
Dont take no for an answer. Be nice, be convincing and be sincere, this is 80% of the battle when dealing with a debt collector. Along with a justifiable story on why you’re in arrears, you should be home and hosed. However sometimes you encounter a combative personality, not unheard of in the debt collection industry, the response from the debt collection might be a resounding no and the demand for the full arrears.
Speak to their manager. In many cases, if your reason for the arrears is justifiable, such as loss of employment or medical issues, and you are sincere, then you’ll have a sympathetic ear.
NCCP hardship laws. As a consumer, you have the right to appeal to s72 of the NCCP, in this, you can ask your bank to make certain structural changes to your loan, including:
- Extend the period of your loan term thereby reducing your monthly payments
- Postpone your repayments (aka payment holiday or payment moratorium)
- Both options 1 & 2
Your bank must by law consider a hardship application from you while placing legal proceedings on hold, however, after due consideration they have the right to reject the application. At this stage, you can appeal through their Internal Dispute Resolution team to have the matter reviewed if your request is still rejected you may then follow the External Disputes Resolution process by contacting the Ombudsman.
Superannuation. Under compassionate grounds you may surrender a portion of your superannuation to pay the mortgage arrears, you can apply to The Department of Human Services for the equivalent of three months mortgage repayments. If your application is successful and you have the available money in your fund, you can use this money to pay your mortgage arrears.
If all else fails. Banks cannot take your house whenever they want, they must follow a due legal process in which legal protocol is designed for the protection of the consumer and provide every opportunity for you to remedy the situation before the house is sold.
In the bank's eyes, this means it will take time & money. If you offer to put your house on the market and provide an agents engagement contract, the bank may well agree to hold action. In most circumstances, you are better off to stay in control of the sales process than hand it over to the bank or allow the legal process to mature to foreclosure. If a sale will occur within a reasonable time then the bank will be satisfied.
About Laurence Hugo: Laurence has worked in Debt Negotiations for 25 years and helped pioneer the industry in Australia. His company Credit Mediation Service Pty Ltd has assisted thousands of families and businesses negotiate with Banks and the Tax Office and overseen the forgiveness of tens of millions of dollars in debts. Laurence has also worked with the homeless at Wesley Mission and for 7 years conducted suicide and counselling training for Sydney Lifeline counsellors. You can reach Laurence on www.creditmediation.com.au or firstname.lastname@example.org
(This article should not be taken as legal advice, rather as a general guide. If you are facing any kind of legal issues it is recommended you seek out legal advice)