Bank loan and possession by bank

As per your concern it is very essential to understand that when a person gets his property purchase financed by a bank or a housing finance company (HFC), the financer has all legal means to recover its dues one way or the other if in case the loan is not paid by the individual/customer. In simple terms, a home loan is a securitised loan, i.e., the lender owns your property until you have repaid the entire loan amount.

Thus, if you miss your Equated Monthly Installments (EMIs) for three consecutive months, the lender is within its rights to first send you reminders for payments. If you are still unable to repay your dues, the lender reserves the right to initiate the process of auctioning off your property to recover its dues as allowed by the legal framework of the SARFAESI Act of 2002.

However, one may use any of the following measures in order to resolve the issue and keep the payment going on, instead of becoming a defaulter for the bank as it's gonna seriously affect the borrowers credit score.

These measures are as follows:-
1.) Take Loan Insurance —
There are various loan insurance plans in the market that can cover your EMIs for a short period. You can consider buying such a plan along with your home loan.
Usually, a scenario where you will find this insurance useful is when you have lost your job. Hence, a loan protection insurance plan is a short-term measure, but beyond it, you will need concrete ways to repay your debt.

2.) Raise funds by disposing of assets —
If you have exhausted your income and savings and are unable to repay the loan, then you can look at other options for raising some cash. You may dispose of your assets such as gold, a car that now seems like a luxury, electronics you don't need, or withdrawn from long-term investments such as Public Provident Fund (PPF).

In case you are facing a challenge in paying home loan EMI's and finding the EMI too high to pay, you may try to reduce your EMI by making a part payment. You may sell some of your non-productive assets like jewellery kept in a locker or surplus land or a car and use the proceeds to make a one-time part payment of a home loan.
This will help you get the EMI reset to a lower level.

3.) Contact your lender and find a solution —
When your inability to pay EMIs is due to a genuine reason such as loss of employment, a serious medical condition, or short-term difficulty, you can discuss the matter with your lender. You can try to persuade your lender to understand your difficulties and convince them that you can resume your loan re-payments soon.
You can show your track record of repaying your previous loans (other than home loan) on time in order to convince the lender. On a case-to-case basis, after an evaluation of your credit history and your current difficulties, your lender may agree to offer you some options that can ease your financial stress.

These options include:
(a) Grace Period;
(b) Refinancing/Restructuring of Loan and,
(c) Interest Rate Reduction.

In case of any further discussion you may contact me on the email ID given below:-
advkmpaul3897@gmail.com

Hope It Helps!

Regards,
Kevin M. Paul

Thank you very much sir,

I have one more question that if  EMIs are due for 90 days then can the bank take physical possession of my flat or they will take symbolic possession by affixing notice without throwing me out of the flat.

I don't think bank takes the drastic step of taking possession of the apartment at this stage. Better, call upon the Branch Manager and explain your position and give a realistic time frame within which you can regularize you housing loan account. Usually banks do permit time and if necessary rephase the loan instalments.

Thank you very much for your great help

Immediately inform your financial difficulties and ask them to reschedule the loan.  Taking possession is not a simple task and there should be notices by registered post, the installments may be more than a year, and then only after publishing in a newspaper they can obtain legal possession.  Every bank employee and borrower knows the entire procedure takes one year after default, and if no installments are received.

You have nowhere stated as to whether you have received a Registered Notice.  Recall of a loan is a tedious task and can not normally happen within few months from default.  A bank can insist on recovery of pending installments, taking possession happens when they totally recall the entire loan.

Banks usually frighten the borrower in their anxiety to recover the loan and it may become a substandard asset in their balance sheet. Recovery is their responsibility.  Do have a commitment and clear the arrears and always reduce every word in writing to Bank through regd post.

Just discuss with the financer and sort out amicably, it is not a big issue where the Banker shall proceed legally.