Adhere to rules on recovery of properties in default, ABM members told

The open plan of the Putra Harmoni Apartment means anyone can come in and out without being able to track.

KUALA LUMPUR: The Association of Banks in Malaysia (ABM) has urged member banks 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 responsible manner.

In a statement on Thursday, ABM said, the banks must engage with borrowers early for alternative repayment arrangements.

“It is a requirement for banks to have in place proper processes, including sufficient notices before action is taken against defaulted borrowers.

“In particular, banks are required to comply with standards, including contacting their customers promptly and proceed to engage in early discussions towards alternative repayment measures to address financial difficulties,” it said.

The association said this in clarification to an allegation in a local media portal, titled ‘Contracts that allow banks to oppress apartment buyers’.

It said generally, for properties with titles, in the event of default, they would be foreclosed through the relevant court process.

In such cases, the borrowers’ rights for adequate notice and due process were determined by law, it said.

“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 said.

ABM said this arrangement was a precautionary step to protect the banks in case of such occurrence.

“However, banks still give adequate notice to the affected borrowers in respect of properties without title.

“Banks must undertake 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,” it said.

It said that the banks should also provide adequate information for the customers to understand the implication of any proposed repayment arrangement including possible recovery actions if the customer continued to default, such as legal and foreclosure proceeding. - Bernama