Bank acted fairly before exercising mortgagee sale right

Categories:

Vulnerable customers and hardship decisions, Bank decisions, Lending,

Summary:

In July 2022, Russell borrowed $344,000 from the bank to buy a property. The loan was secured by a mortgage over the property. Russell later got into personal, medical and financial difficulties and began missing loan repayments from late 2022. The arrears continued to grow during the next three years. The bank issued formal demands in 2025, and later issued a notice requiring repayment of the arrears, which totalled $15,969. When the arrears were not paid, the bank started the mortgagee sale process. The property sold at auction for $350,000.

Russell complained that the bank had not provided proper support, had sold the property without his consent, and had not obtained a suitable sale price. He also said the bank should have arranged income protection insurance, which would have helped him greatly.

Published:

August 2026

Our investigation

Russell applied for life, crisis and income protection insurance in 2022. The bank offered life and crisis cover, but not income protection cover. Russell did not accept the offer, despite reminders from the bank. The records did not show that Russell had mortgage repayment insurance, income protection cover or similar cover with the bank.

After Russell began to miss loan repayments in late 2022, the bank contacted him regularly about the overdue amounts and the consequences of remaining in default. It also discussed hardship assistance with him in twice in 2023. Russell told the bank he did not want to apply for financial hardship assistance because he was concerned it might affect future lending applications for his business. The bank nonetheless continued to discuss Russell’s arrears with him, and provided him ample opportunity to repay the overdue amounts. We found the bank had treated Russell fairly and ethically, and communicated clearly with him.

When the bank decided to proceed with a mortgagee sale, it followed an appropriate process. It had also considered Russell’s personal circumstances, and agreed to defer the sale for six weeks to provide him a final opportunity to refinance. The bank then obtained an independent valuation and appointed a real estate agent to market the property for a month before sale. We therefore found the bank took reasonable care to obtain the best price reasonably obtainable at the time.