ABM clarifies allegation that banks oppress borrowers

Kuala Lumpur: The Association of Banks in Malaysia (ABM) has clarified an allegations made by a local media portal that all major banks in the country had occasion to oppress borrowers through two contracts, namely the deed of assignment and power of attorney agreement. It said generally for properties with title, in the event of default, the properties would 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 said in a statement on Thursday.

This arrangement, the association noted, is a precautionary step to protect the banks in case of such occurrence.

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

"Our 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.

"Further, banks are also required to 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," it said.

In particular, banks are required to comply, among others: upon detection of any signs of repayment difficulty, banks would proceed to contact customers promptly and proceed to engage in early discussions towards alternative repayment measures to address financial difficulties.

It also said banks must make reasonable efforts to offer an alternative repayment plan that was appropriate to a customer's changed circumstances and financial situation with the aim of resolving genuine repayment difficulties of the customer.

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They (the banks) should also give adequate information for the customer 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, it added.

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. – Bernama

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