I have defaulted and I am now in foreclosure
Although we will make best efforts to assist you in rehabilitating your home loan there may come a time that we need to initiate foreclosure proceedings to recover the outstanding liability due to us.
In the event that the foreclosure process has commenced a number of steps will follow:
Letter of demand/written demand
A letter of demand serves to inform the debtor and / or surety of an amount that is being claimed within a stipulated period.
In the pleading stage a summons setting out the Plaintiff’s (i.e. SA Home Loan’s) details of the claim is served on the Defendant (the bondholder that has defaulted). Once a summons is served on a Defendant they have 10 Court days in which to defend the action. Court days are all calendar days excluding weekends and public holidays. If the Defendant does not defend the action the Plaintiff is entitled to request default judgment.
It is a judgment in favour of a Plaintiff when the Defendant has not responded to a summons or has failed to appear before a court of law.
More Information About Default Judgment and Writ (Warrant of Execution Against Property)
A default judgment will severely injure your financial future and should be avoided at all costs. Some of the consequences of a default judgment are:
- A judgment will negatively impact your credit score.
- A judgment is valid for up to 30 years and can stay on your credit record for 5 years (but only if debt obligations are settled)
If the debtor does not honour a Court judgment the creditor may issue a warrant / writ of execution in terms whereof the Sheriff of the Court may attach and sell so much of the debtor’s property necessary to satisfy the judgment.
Sale In Execution
A sale in execution is a public auction of a bonded property by the Sheriff of the Court. A sale in execution is usually the last step that is taken when clients are unable to service home loan repayments; the home loan is in arrears, and all other efforts at rehabilitating the loan has failed. Properties sold in this manner must be advertised in the Government Gazette and two local newspapers.
If the property is sold at auction the bondholder will remain liable for the payment of any shortfall and legal costs, including the costs to sell the property at the sale in execution – this shortfall is the difference between what the property is sold for and what is owed on the bond plus interest and costs incurred.
Alternatives To Foreclosure
As emphasised throughout, we strongly advise our clients to proactively manage their finances and in particular their home loan instalment commitments. Legal action is always the last resort, and is costly both for SA Home Loans and our clients. In addition to the arrangement options discussed previously, we provide two further services to our financially distressed clients.
“Sell Assist” – Is a programme that allows SA Home Loans to market and sell the property on our clients’ behalf.
The process begins with the signing of a sole mandate by you. This mandate allows SA Home Loans to instruct reputable estate agents to market the property exclusively. You are advised of the progress at every step and if an offer is received that is to you and SA Home Loans satisfaction, you will be required to sign the Offer to Purchase; the normal transfer procedure then follows.
Special Power Of Attorney
A special power of attorney (or SPOA) is an agreement between SA Home Loans and you wherein we have been given the authority to market and sell the property. Unlike “Sell Assist”, in an SPOA, SA Home Loans has the right to consider and accept offers of behalf of the client.
As such, the Agent will liaise with SA Home Loans regarding the offer, and if acceptable SA Home Loans will sign the offer to purchase. Thereafter the normal transfer process will commence.
Clients that opt for these options enjoy a further benefit of reduced conveyancing fees if one of our panel attorneys is utilised for the transfer.