Banking Ombudsman Offers Guidance on Mortgage Issues

Banking Ombudsman Offers Guidance to Banking Customers on Mortgage Issues

Difficulties with mortgage finance remain the single largest cause of complaints to the Banking Ombudsman, and mortgagee sales disputes have been at record levels says Banking Ombudsman Deborah Battell.

Ms Battell says New Zealanders need to understand what might happen if they can’t make their mortgage repayments, and how they can help themselves.

The Banking Ombudsman Scheme today released a Quick Guide to Mortgagee Sales. The guide outlines how the mortgagee sale process works, what a banking service provider is entitled to do, and what steps a banking customer might take to avoid getting into difficulty.

Ms Battell said the Scheme had released a number of similar guides in the last 18 months aimed at helping banking customers avoid future disputes and better understand their rights and obligations.

“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,” said Ms Battell. Since the start of 2011, the Banking Ombudsman Scheme has referred 512 complaints and enquiries about mortgage 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 constitute 40% of her investigation workload compared with 17% in pre-global financial crisis times.

The 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 banking 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. It’s therefore important that customers talk to their banks about their options early, before the situation become irreversible,” says Ms Battell.

A pdf of the Quick Guide to Mortgage Sales is available here.

OTHER QUICK GUIDES

The Banking Ombudsman Scheme’s Quick Guides are available to download at www.bankomb.org.nz/Publications/Quick-guides

Quick Guides currently available include:

• Joint accounts and relationship breakdowns
• Irresponsible lending
• Cheque clearance
• Breaking a term deposit
• Financial abuse of the elderly
• Direct debits
• Early repayment costs on fixed rate loans
• Hardship and financial difficulty
• Looking after your credit and debit cards and PINs

ENDS

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