In the crisis it is customary to save. This is especially true for large purchases, and the purchase of an apartment, of course, can be attributed to such. We are accustomed to a mortgage, but in recent years, our citizens have begun to show interest in buying housing at public auction – the mark-up may be significant, but without risks is not complete.
Today, housing in a mortgage is often the only possible option for an apartment. However, even in the middle of last year, banks considered mortgage borrowers to be reliable customers: credit institutions increased their portfolios, and the money for buying housing in individual cases could be obtained with a minimum package of documents.
In general, debts are growing. And what happens when a mortgage borrower can no longer repay a loan?
Auction or bidding?
In this case, some fines await him. The first is fines and penalties for late payment, with the help of which banks try to influence the negligent client. In practice, three main forms of fines are used: in the form of a fixed amount, in the form of an increased interest on arrears and as a percentage of the total amount of the remaining debt.
If this method of maintaining financial discipline does not work, then on the horizon there is a second trouble – the defaulter risks losing the property he took out a loan for. After all, the mortgage involves a pledge of the property purchased by the borrower, and if the debtor does not fulfill its part of the obligations, the bank has the right to realize the subject of the contract in order to get back the money.
Of course, it is easier for the borrower and the bank not to bring the matter to court and try to resolve the issue in a peaceful way – for example, the parties can conclude an agreement on the sale of real estate in extrajudicial order, according to which the debtor sells the mortgaged property and completely extinguishes the loan. The debtor may get help from a professional third party such as Hudson & Marshall. In this case, it is an auction and its organizer operates on the basis of an agreement with the bank. The property receives an expert evaluation that will determine the initial price of its sale. Then, 1-2 weeks before the auction, the organizer submits a special announcement about its conduct – it should be published at the location of the real estate in the printed publication – the official information resource of the executive authority.
The winner is the one who will offer the highest price. Further, the winner signs with the organizer a protocol on the outcome of the auction, after which he undertakes to make the remaining difference between the amount of the pledge and the sale price within 5 banking days. And all those who lost the auction, within the same 5 banking days receive their pledge back. Also, money is returned if the auction did not take place. After the auction winner completely pays for the apartment, he gets another 5 days to sign the contract of sale with the organizer of the auction, and after the state registration, the apartment becomes his property.