ABM: Proper processes in place before actions taken on defaulted borrowers

PETALING JAYA: The Association of Banks in Malaysia (ABM) stressed that banks are required to undertake proper processes including sufficient notices before taking action against defaulted borrowers.
ABM said this in a statement, in response to recent article in a local media portal titled "contracts that allow banks to oppress apartment buyers".
"Generally, for properties with title, in the event of default, the properties will be foreclosed through the relevant court process. In such cases, the borrowers' rights for adequate notice and due process are determined by law."
"Conversely, for properties without title, it is common practice for banks to obtain a power of attorney from the borrower to allow the bank to sell the property in default," it noted.
ABM said this arrangement is a precautionary step to protect the banks in case of such occurrence. However, it said banks do still provide adequate notice to the affected borrowers in respect of properties without title.
ABM highlighted that its member banks are required to adhere to the standards set by the regulator in relation to the recovery of properties in default to ensure that it is made in a responsible manner.
Additionally, it said, upon detecting any signs of repayment difficulty, banks are required to contact customers promptly and engage in early discussions towards alternative repayment measures to address financial difficulties.
"Banks must make reasonable efforts to offer an alternative repayment plan that is appropriate to a customer's changed circumstances and financial situation with the aim of resolving genuine repayment difficulties of the customer."
Meanwhile, ABM said the banks are also required to present the bank documents such as contracts, agreements and policy documents in plain language so that it is easy for readers to understand.
"In instances whereby, the use of legal and technical terminology cannot be avoided, the meaning of these terminologies would be explained or printed in a glossary for reference."
"Thus, while there are different types of loan documentations applicable for housing loans, there are adequate rules to ensure the interests of the borrowers are protected," it said.
The public may contact ABMConnect at 1300-88-9980 or via eABMConnect at www.abm.org.my for any enquiries or complaints related to housing loan matters.