Sunday, June 28, 2009

What does a mortgagee sale mean?


Source : Sunday Times – 28 Jun 2009

Where do you see this?

In financial news articles, classified advertisements and auction houses’ list of properties on offer.

What does it mean?

A mortgagee sale takes place when a bank force-sells a property after it has repossessed it, when the borrower cannot pay his mortgage. The repossessed property is usually sold via an auction by the bank – and often as a last resort – to recover the debt of the defaulted borrower.

Why is it important?

Such forced sales can throw up great bargains for investors.

A surge in the number of repossessed properties is a sign that the economy is not looking good. It signals a worsening property slump.

For instance, the number of such properties shot up at auctions during the economic crises of 1986 and 1998, when many homeowners struggled to pay their mortgage instalments.

But this time round, the number of mortgagee sales has not risen.

So you want to use the term. Just say…

‘I have been monitoring auction houses’ list of mortgagee sales to see if I can get my hands on a real bargain.’


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