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Property Tips: When can a bank auction a property if the home loan is not repaid? Those who pay EMI should know the rules..

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A house is the biggest investment in life for everyone. Every person invests a lot of money to build their dream house. It is a bit difficult to raise so much money at once. That is why every person takes a loan from the bank to build or buy a house. While taking a home loan, you have to mortgage a property as a guarantee.

If the person taking the loan is unable to repay the loan for any reason, then the bank auctions that house or property and recovers the loan amount. There is a complete process for seizing the property. If such a situation arises in life, then you must know about your rights (Bank Rules) regarding property auctions.

When and why does the bank seize property?
The loan taken from the bank for a house or any other property has to be repaid on time. If the installment of a home loan or any other loan is not paid, the bank recovers its amount by seizing your property. However, it is not that if the loan installment is not deposited, the bank will immediately take possession of your house and auction it. In case of non-payment of a loan, the bank gives many opportunities to the person taking a loan. Auction is the last option. But even then if for some reason the property has to be auctioned, then also the person taking the loan has many options.

If a person does not pay the loan EMI for 2 months continuously, then the bank sends him a reminder i.e. reminds him about this. Even after this, when the third installment is not deposited, a legal notice is sent to the customer. Even then if the EMI is not paid, the bank declares the property as NPA, and the person taking the loan is declared a defaulter.

Rules related to auction-
However, it is not that after being declared NPA, your property will be auctioned. There are 3 categories in this too - Substandard Assets, Doubtful Assets, and Loss Assets. In case of non-payment of EMI, the loan account first remains in the category of substandard assets account for 1 year, after this, it becomes doubtful assets and when there is no hope of loan recovery, then it is considered as 'loss assets'. Remember, the property is auctioned only after it becomes a loss asset. The bank issues a public notice for the auction.

Some rights are available during the auction-
Before the sale of the asset, the bank or the financial institution from which you have taken the loan has to issue a notice stating the fair value of the asset. It also needs to mention the reserve price, date, and time of auction. If the borrower feels that the price of the asset has been kept low, then he can challenge this auction.

If you are unable to stop the auction of the asset, then keep an eye on the auction process because you have the right to get the extra amount left after the recovery of the loan. The bank has to return that remaining amount to the creditor.

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