Mortgage nightmare: A Guide to Mortgagee sales

Olly Newland’s Column, 31 May 2009

‘Mortgagee Sale.’ These two words can strike terror into the heart of any property owner. A mortgagee sale can destroy families, businesses, and lives. Over the last year more property owners in financial difficulty have faced the loss of their home or investment to the pay off the lender.
Sometimes the dreaded situation arises from an innocent change of circumstances (job loss, marriage split etc). But sometimes it results from the greed or naivety of those who believed the hype that property prices would rise forever. Now, with the ‘worst recession in 70 years’ sapping the economies of the world, the lesson has to be taught all over again: What goes up must go down.

In March this year forced home sales hit a 15-year record of 201 properties according to Terralink. This ‘worrying trend’ showed that ‘there were still a lot of distressed owners through out the country’ according to Terralink.

Other statistics support this view: Trademe reported an increase of 231% of forced sales in the last twelve months alone. The large number of advertisements appearing for mortgagee sales is evidence we can all see that this explosive increase is not a myth but a sober reality.

What’s worse is that a mortgagee sale is the highly visible ‘end-game’ of a long process. I estimate that for every mortgagee sale that actually gets advertised there are at least another fifty property owners in distress but who manage to sell, refinance, or come to some arrangement under pressure before the hammer falls.

So let’s discuss the basics of what really happens before and after the mortgagee sale process begins.

Read the rest of this column

‘Mortgage nightmare’ (Shorter version as Herald on Sunday column )
NZ_Herald Sunday 31 May 2009

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