What happens if a Loan goes into default?

If a Loan goes into default, we increase our level of management of the Loan and Mortgage and take steps to have the Borrower rectify the default.  If the default is ongoing, we report regularly to Members of the Sub Scheme about its status. If the default is not rectified, we take steps as mortgagee to realise the Sub Scheme property and any other collateral security.

If the Borrower defaults, we charge the Borrower for management fees and expenses incurred in rectifying the default and recovering secured moneys.  Our fees and expenses will only be deducted from Members’ investment funds if there is a shortfall upon realisation of the Sub Scheme Property and any other collateral security. The balance of Member’s investment funds will be paid to Members. If a management fee is to be deducted for a particular Sub Scheme, this will be disclosed to you.

During the period of default we may elect to continue to pay you your usual monthly interest at the standard interest rate. In these circumstances we will retain the difference between the amount paid to you and the higher penalty rate when the default is recovered from the Borrower. If we do not elect to pay you the usual monthly interest at the standard interest rate, you will receive 80% of the difference between the standard interest rate and the higher penalty rate upon recovery of the default from the Borrower. The 20% retention by us recognises the additional burden on our resources in collecting the defaulting loan.