In order to recovery money from corrupt absconders, the government has passed an ordinance that allows banks to recovery money by selling mortgage of the defaulters.
The rules are aimed at keeping the process transparent and for recovery of the amount from defaulters under prescribed regulations. The procedure for the sale of mortgaged property has been under section 15 of the Ordinance for the determination of liability.
“Before sending the first notice to the mortgagor under sub-section (2) of section 1S of the Ordinance, the financial institution, in order to get the outstanding mortgage money determined, shall forward the case to a chartered accountant firm,” the notification attached with the SBP’s circular said.
Such chartered accountant firm shall neither be nor have been, during the last three years, a statutory auditor of, or employed or engaged as a consultant by, the concerned financial institution or the mortgagor.
Under the rules, banks, in case of more than one mortgagees of the mortgaged property, will also request these mortgagees to submit their respective claims for outstanding mortgage money to the chartered accountant firm so nominated or appointed by the financial institution along with complete documents to support their claims. The guidelines said the chartered accountancy firm would proceed to determine the outstanding mortgaged money of the concerned financial institution only if the mortgagees failed to submit their claims of mortgage money to the firm.
The financial institution will hire three valuers from the approved list of professional valuers maintained by the Pakistan Banks Association for valuation of the mortgaged property, it said.
After the valuation of the mortgaged property, the financial institution shall make a publication in terms of clause (b) of sub-section (4) of section 15 of the Ordinance; the public auction for the sale of the mortgaged property shall take place after fifteen days of the publication of the notice under clause (b) of sub-section (4) of section 15 of the Ordinance,it added. The guidelines also empowered the Federal Investigation Agency to investigate all complaints filed by the financial institutions regarding willful default cases.
They are not selling mortgages. They are foreclosing on the properties provided as collateral. selling mortgages means they are selling that debt to another company. Yes that is an actual and separate thing in more developed financial markets.