Home loan is not just a credit product, it is actually a financial commitment. This commitment usually lasts for a decade or more. The customer promises to give a fixed amount to the lender for the coming years or a maximum of 30 years. The customer can find out his monthly EMI before taking home loan through EMI calculator. Therefore, you can plan finance better.
It is very easy to commit but due to unpleasant situations they become difficult to keep up. Such a bad situation can come at any time in life, when you are facing cash crunch and unable to pay EMI. Such situations do not come in the way of life. But in the worst case, if you ever have to go through such a situation, then you should know what to do. When choosing a home loan, we should always expect the best and keep ourselves ready for the worst. Let us tell you what is the default in home loan and what should be done if it happens to you.
What is home loan default
When a person is unable to repay the EMI and does not meet the terms of the legal agreement of the loan made with the lender, it is called loan defaulting. It is written in the loan agreement that the customer will give a certain amount to the lender every month. But if the customer stops paying EMI, then it is called a loan defaulter.
The Reserve Bank of India (RBI) has a partnership with the Indian Banking Association and has set very strict guidelines which banks have to follow while recovering loans. When it comes to home loans, it becomes a very sensitive issue for the customer. Realizing this, RBI has framed these rules for the loan recovery process of banks. The RBI has ensured that even if a person fails to repay the loan, he should be treated with respect. Let us tell you what are the rights of a loan defaulter.
These are the rights of the defaulter
Right to notice
The loan defaulter is required to get a notice from the bank before beginning the loan recovery process. When the customer is unable to pay EMI for 90 days, the bank sends him a notice for the next 60 days. If the 60-day notice period is over and the loan is not paid even then the bank can take legal action against it.
Right to be heard
During the notice period, the loan defaulter can speak to the lender and lodge an objection against the notice. Within 7 days, the officer of the bank will have to give valid reasons why he is rejecting the customer’s application.
Right to fair value
In worse conditions, if the bank confiscates your property then the property value should be finalized only with your consent. If you feel that the lender is undervaluing the property, then you can raise your voice. In such cases, you can tell the objection or the price which is reasonable. Apart from this, you can find a good customer and have a meeting with the lender, who believes that he can get a good deal.
Right to balance auction process
The loan defaulter has the right over the remaining amount of the auctioned property. If the house is sold by the bank for a higher amount, then you have the right to get additional amount.
What to do if a recovery worker knocks on your door?
If you have not paid EMI for 5 months and you have also received notice from the bank, then the recovery staff of the bank will knock on your door. But even if they come to your house, you still have some rights.
If the recovery staff of the bank come home then these are your rights
Right to check their ID
First of all, you can ask the agents to show the ID card. Employees should be authorized by the Indian Institute of Banking and Finance to undertake recovery work. All recovery agents should have ID card and bank authorized letter.
Right to privacy
Recovery employees should only be mean with their work. No agent has the right to talk to the family members of the loan defaulter. Agents will talk to the family only when the loan defaulter is not at home. Agents can come to the defaulter’s house from 7 am to 7 pm only. Agents cannot threaten the defaulter under any circumstances. If they do, then you can complain against them.
Right to be treated respectfully
Whatever be the condition of your loan, it is your right to be respected as a customer of the bank. The Indian law of loan defaulters says that the collection officer will ask you for a meeting according to humility and convenience. This facility is also one of the rights of loan defaulters. Collection agents have to deal with the defaulter in a respectful manner without any offensive language or profanity.
If this happens to you that you cannot repay the loan and the recovery staff reaches your door, it does not mean that the matter is over here. There are still many ways through which you can save your property.
First of all, talk to your lender. Be careful not to ignore the phone of the bank or the recovery staff. This may increase your worries. You should call your lender and tell them your financial situation so that it increases the notice period.
One time settlement is also the way to protect yourself. This is the process where the bank forgives the loan interest and you have to repay only the principal amount. But keep in mind that all this is your credit.
Will appear in the report
If the best way is to restructure the loan. By choosing this method, you can ask the lender to extend its loan term, so that the EMI amount is reduced and become eligible to repay the EMI again.
Home loans are the first step for many people to buy a home. People from all over the world use it for financial assistance to buy a house. But at the same time, we have to use it carefully because your dream home can slip out of hand due to non-repayment of loan.