Hi,
I have a question about residential mortgages and the NCCP Act. I'm trying to determine exactly what protection a borrower has from a bank taking foreclosure action in an instance where the borrower continued to make all payments on time and adhered to all other provisions of the mortgage contract. My specific question is this...
Do lenders have the ability to foreclose, force the sale of, repossess, call in, demand a loan 'top up', 'margin call' or otherwise take action against a borrower simply because general house prices have fallen? If the mortgage contract includes a clause stating that a default occurs when the lender is not 'reasonably satisfied' with the value of the property, could the lender use this clause in the event of a general property crash to declare that the borrower has defaulted? Would the NCCP permit the lender to take action against the borrower in such a case?
For example, after taking out a mortgage, property values in the area fall to a point where the value of the property might be less than the originally agreed LVR, or fall to some other point where the lender is not 'satisfied' with the valuation. Does the lender have the right to then revalue the property, declare that the borrower has defaulted, and take action against the borrower?
In other words, the borrower is keeping up with their repayments, has not breached any other conditions of the contract, and the only issue is that the bank decides it is no longer 'satisfied' with the value of the property because house prices happen to have fallen. Is the borrower protected by the NCCP?
Thanks for your advice in this matter.
Regards.
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