For those of you who were not aware, I am 1 of only 350 Certified Distress Sale Property Experts (CDPE) in South Africa. Currently there are many people under water i.e. they owe more on their mortgage bonds than their houses are worth. Many people are experiencing severe financial pressure and I thought I should share this story of a client I recently helped who was in such a position and hopefully it will help you, a friend or family member. I helped them list their house for sale Strandfontein and got FNB bank to write off R150 000 from their debt. This is how the story goes:
Client x had a Strandfontein property and owed about 1 million rand on the FNB mortgage bond. The problem was he had "overpaid" when he bought the property in early 2007 at the peak of the property market. The property was only worth about R800 000 now because of prices declining and also the bond that was granted to him included transfer and bond costs (commonly known as a 108% bond). His wife had been retrenched from her job and they were unable to keep up with their mortgage bond payments. The bank was starting to take legal action and repossession proceedings in order to limit their losses. They were trying all they could to keep their home especially since it broke their hearts to let their 2 little kids down as they loved the house.
Fortunately they were realistic about their situation and understood that if your house gets repossessed you are blacklisted for 30 years (you cannot access credit during this period) and you are lumped with the shortfall amount at the sale in execution auction plus costs. They called in a few estate agents in Strandfontein to see if they could sell the house. Unfortunately these estate agents were ignorant and did not know how to do short sales. Some who didn't have the knowledge, simply walked away from the listing as they knew the house would not sell for over a million rand and did not want to waste their time (remember the agents commission and some other costs must still be covered as well). Other agents listed the property at 1.1 million rand in the hope of somehow, by some miracle striking it lucky and getting a sale. This was the worst thing they could do, and although they had good intentions, they actually made the situation worse for the client as the house did not sell and his mortgage bond went further in arrears.
Eventually the client called me. As we are one of very few listed on he banks estate agency panel, we were able to get the bank to agree to write off 15% of his debt (R150 000). This meant we could list the property at a realistic price and within a week we had sold the property for R800 000. This meant there was still R50 000 short after the R150 000 write off. FNB agreed that the client could pay the shortfall of R50 000 over 10 years interest free. Additionally, they would not blacklist the client meaning he can possibly access credit etc very quickly again and can hopefully buy another house in the near future.
Yes, of course it was still traumatic for the family to loose their home, but at least this way they have hope for the future and they stepped out of the situation relatively unscathed.
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