Australian families are facing the potential loss of their homes at an alarming rate, with 13 families per week at risk. According to the latest data from the Supreme Court of NSW, there were 346 possession-related writs issued in the first six months of this year, compared to 390 for the entire 2022 and 284 in 2021. This figure is projected to double the previous year’s count nearly.
The situation is reminiscent of the period after the 2003 property boom when more than 5000 writs were being issued. In 2006, Sydney’s west saw most of the 5368 writs issued to families. The cost-of-living crisis is affecting the mortgage belt while the big lenders continue to report record profits.
Additionally, the latest CoreLogic data suggests that many mortgage holders are selling their homes at a loss rather than trying to keep up with rising mortgage repayments. The proportion of loss-making sales for homes held for less than two years has tripled since late 2021.
In February, NSW Chief Justice Andrew Bell warned of a forthcoming “very significant” spike in home repossessions due to successive interest rate hikes. During a speech at the beginning of the 2023 term, Justice Bell informed the Law Society of NSW about the court’s anticipation of substantial growth in the possession list this year.
Foreclosure Process in NSW Understanding the Stages and Borrower Rights
A lender repossessing a property, also known as foreclosure, typically follows several key stages in New South Wales (NSW). It’s crucial to note that foreclosure is usually the last resort for lenders when a borrower has significantly defaulted on their mortgage repayments.
1. Notice of Default: The process begins when the borrower defaults on their mortgage payments. The lender then sends a formal default notice to the borrower, notifying them that they’ve defaulted and providing a minimum of 30 days to rectify the default.
2. Notice to Vacate: If the borrower fails to rectify the default within the given period, the lender may issue a notice to vacate. This document advises the borrower to leave the property, typically within a certain timeframe.
3. Application for Possession: If the borrower still doesn’t vacate the premises or make good on their arrears, the lender may apply to the Supreme Court of NSW for an order for possession. This legal document gives the lender the right to take physical possession of the property.
4. Enforcement of the Order: If the court grants the order for possession, the lender can then engage a sheriff to physically evict the borrower and any other occupants from the property. The lender may also change the locks to prevent re-entry.
5. Sale of Property: Once in possession, the lender will typically sell the property to recover the money owed. This sale can be by auction or private treaty. The lender must sell the property for the best possible price, and if the sale proceeds exceed the debt owed, the surplus is returned to the borrower. Conversely, if the sale does not cover the full debt, the borrower is still liable for the remaining balance.
Throughout this process, it’s important for borrowers to be aware of their rights. They can seek legal advice at any stage of the process, and in some cases, lenders might be open to negotiation or restructuring the loan to avoid repossession. Borrowers should also be aware that the lender has an obligation to act fairly and not to repossess the property unless they have taken reasonable steps to help the borrower overcome their financial difficulties.
In conclusion, as a real estate agent, it is essential to advise homeowners to consider selling their property while they still have control over it. Taking proactive steps to initiate the selling process can yield several advantages.
Not only does this approach allow homeowners to navigate the sales process more smoothly, but it also often garners a positive response from lenders.