Author: Mark Hopkinson
Published: 5 July 2023
Pages: 43

Introduction

I last presented this topic in May 2019. At the time, New Zealand was in relatively buoyant economic phase with low interest rates, surging house prices and sustained low employment. Looking forward there was some anticipation that economic activity would slow and mortgagee sale volumes increase.

Few foresaw the impact of the COVID-19 pandemic. The immediate consequence was the temporary extension of the 20-working day default period in the Property Law Act 2007 (PLA) to 40 working days. This extension was designed to provide relief for those negatively affected by the pandemic. From a lender’s perspective it slowed down the enforcement process. In some cases, a mortgagee sale became a difficult, and possibly undesirable, option.

Now in mid-2023, we are experiencing falling house prices and significantly higher interest rates. In April 2023, Centrix data showed mortgage arrears increasing for the seventh month in a row. The volume of mortgagee sales is already increasing and will increase further. As such, practitioners can expect to come across more mortgagee sales.

The purpose of this seminar and paper is to provide key information on the mortgagee sale process which will better equip practitioners to deal with mortgagee sales. In some cases, this may mean knowing when to ask for help.

I hope that the observations on mortgagee sales since the 2019 presentation, gained particularly over the last 12 months, will be of value especially to those who attended that presentation.

Content outline

• Power of sale
• Service
• First mortgage or second mortgage?
• Duty of care
• Clearing the title
• Ssales process
• Accounting for sales proceeds
• Mortgagee in possession
• Leases
• Miscellaneous