Couple slam humiliating mortgagee sale process

HUMILIATED: Christchurch couple Shane and Lynette asked not to have their surname used because they were too embarrassed to even tell their families about their mortgagee sale in October.

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A Christchurch couple who lost their home to a mortgagee sale after being made redundant say they were treated like "dirt" in the process.

Mortgagee figures show flow-on effects of the recession continue to hit "Mum and Dad" New Zealanders with sales of homes of one-house families now accounting for one in four bank-forced sales.

Christchurch couple Shane and Lynette asked not to have their surname used because they were too embarrassed to even tell their families about their mortgagee sale in October.

The $330,000 mortgage on their Burnside home became unserviceable when Shane, 47, was made redundant from his manager's position in February 2008.

Seeking a solution, the couple went to their lender, Nationwide Home Loans, a National Bank subsidiary. They obtained what they thought was a three-month mortgage holiday but at the end of the period they were served with a demand for the outstanding amount, Lynette said.

A Nationwide spokeswoman told The Press it does not offer mortgage holidays.

An arrangement was made to add $50 per week to the couple's already $700 per week repayments to cover the outstanding portion.

Shane got a new, lower-paying job, but when the fixed term on their mortgage expired in August last year, the best rate they could find was 10.5 per cent. Lynette was made redundant in May 2009 and the situation became dire.

Discussions with the bank on reducing the interest and tacking it on to the end of the mortgage fell through and with the mortgage contract-break fee taking their liability to more than 90 per cent of the house's value, the couple were unable to find a new lender.

Attempts to independently sell the house failed and the bank started proceedings to force a sale. "We didn't fight them," Lynette said.

The house sold but the couple said they were never notified and had to contact the new owners themselves to arrange the removal of chattels.

The bank did not contact them and they had to contact the bank's lawyers to see what had happened.

Nationwide said records showed many attempts to contact the couple, but letters and phone calls often received no response. "All actions taken during the mortgagee sale were communicated in writing," the spokeswoman said.

Shane and Lynette said they received a letter from the bank in October saying their loan balance was now zero.

However, the next month, a debt-collection agency contacted them saying they owed $63,000.

Nationwide had transferred the amount of the unpaid interest together with a $9000 contract-breaking fee and $17,000 in real estate agents' fees to Baycorp – which tacked on their own $8000 fee.

"They put it straight into Baycorp without even telling us," Lynette said.

Nationwide said solicitors wrote to the couple about the shortfall at the end of the mortgagee sale – "but again received no response so Baycorp was contacted". "It appears [the couple] did not receive this letter even though they had their mail redirected."

The last couple of years have taken an emotional strain and Shane and Lynette both had tears in their eyes at times when they recounted their story.

Lynette is on medication and Shane is seeing a counsellor.

"It's gut-wrenching," Shane said.

The lack of communication from the lender and the unwillingness to come to a repayment solution astounded them, Lynette said. "It's like we're not human beings at all. We were treated like dirt – we're just dogs to be kicked."

Nationwide disputes that communication was lacking.

"We regard a mortgagee sale as very much a last resort after all other options are exhausted and to prevent further escalation of the financial hardship due to other bills that often mount," the spokeswoman said.

The couple now have new jobs and would have been able to deal with the repayments with ease, Lynette said. "Had the bank had a little bit of faith we would have still had our home."

Nationwide said after discussions with the couple, they had agreed to put the Baycorp action on hold. "A repayment schedule for the outstanding debt has now been agreed," the bank said.

- © Fairfax NZ News