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Not all is lost: the right solutions for mortgage lenders

What are the common reasons why banks refuse to grant a mortgage, in which cases can the decision be changed and what to do when there is no possibility of obtaining a bank loan?

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• Mortgage

Ariel Ahon, in collaboration with Zap Legal

Sunday, 28 February 2021, 16:52

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Not all is lost (Photo: ShutterStock)

Every year, many Israelis apply to banks for a mortgage and are refused.

Unfortunately, many of them choose to give up and give up instead of trying to figure out if they can change the evil of the decree.

We spoke with Ariel Ahon, an expert mortgage adviser, in order to understand how to react when the bank refuses to grant a mortgage and how an experienced mortgage adviser can help.

"When talking about mortgage defaults, it's important to distinguish between two types of defaults," Achon begins.

"The first type includes those whose refusals are rejected by the banks, but in principle the bank can be made to change its decision. The second type includes those who, even if their father runs the bank, will still not be able to get a mortgage."

- What cases are included in the first type for example?

The first group has all those whose application was denied due to various problems that can be corrected. This refers, for example, to a low repayment ratio: the Bank of Israel determined that the total mortgage repayments or the total loans and liabilities, can not exceed half the family cell's net income. In practice we can see that the banks usually do not approve applications that come from families with a repayment ratio of more than 40% and personally I recommend not exceeding 35%.

This means that if for example the family earns NIS 20,000 net and the mortgage repayment is expected to be NIS 7,000 In a month, while there is already a loan with a monthly repayment of NIS 2,000, the bank will most likely not approve the mortgage because the total monthly repayments constitute 45% of the net income. Similarly, the bank may refuse as a result of lower equity than required. The borrower is obliged to bring at least 25% of the value of the property from equity, so if the value of the property is NIS 1 million and the borrower has only NIS 200,000, even then the bank will probably not approve the loan. Of course there are more complex cases The bank's decision. "

- How can you actually get the bank to change its decision?

"Each case will be examined on its own merits, so I can not provide you with an answer that will suit all situations. You can talk, for example, about refusing to grant a mortgage due to poor credit management. In the last two years, with the entry of the BDI, the bank can accept All the information he needs to understand who he is dealing with.

The bank can know, among other things, about loans we have taken from other banks and even about delays in repaying loans or non-compliance with charges by banks from the last three years.

The information is centralized in a central database managed by the Bank of Israel and all major financing bodies in Israel are careful to report to it.

This refers not only to banks but also to credit card companies, insurance companies and more.

So in case the bank refuses to provide a mortgage due to a problematic credit report, it is usually possible with precise planning and proper work, to make the customer meet the threshold set by the Bank of Israel. In some cases work will be required of several weeks or months but there are also cases where Only minor changes and submitting the case to the bank immediately. Among other things, we have the option to clear the report of negative indications, recommend the customer to raise additional equity and more.

Our firm works with lawyers who are in contact with the Bank of Israel and in the vast majority of cases we manage to find solutions for mortgage refusers whose application was denied due to problems and deficiencies in their credit report.

It is possible to make the bank change its position (Photo: ShutterStock)

- Until now you have expanded only on the first type of refusers.

What about the second type?

"In the second group of those who refuse, we find more complex cases. This refers to cases where the bank will not even consider the application, ie cases where we have no option to change things and meet the criteria of the Bank of Israel. I mean for example cases of bankruptcy, bankruptcy, There is a severe restriction in the banks and the list is still long. "

- How do you know if the background to the refusal is included in the first type of cases or in the second type?

"The job of a mortgage counselor is in a sense reminiscent of a doctor's job. A patient who comes to a doctor with a problem needs to go through a diagnosis process so that the doctor can know the source of the symptoms he is suffering from. Just like a client, I do a comprehensive and thorough analysis to understand What is its real situation, what are the chances that the bank will grant it a mortgage, what are the chances that it will refuse and what can be done if the application is rejected or expected to be rejected.Just as after the medical history and diagnosis, the doctor offers the appropriate treatment. To the factors that led to the refusal. "

- So what exactly can be done when it comes to a refusal against the background of a complex case like an open case in execution for example?

"As I mentioned, in the field of mortgage advice, each case will be examined on its own merits. But if it is completely clear to me that a bank loan is not possible, I will give up this channel and continue to advance in a non-bank loan channel. There are quite a few financing funds. Which can help debtors who have been refused by the banks to rehabilitate their financial situation. "

How do you know the background to the refusal?

(Photo: ShutterStock)

- How exactly does it work?

"Here too you can see why it is important to contact an experienced mortgage adviser. This is because there are many financing funds but it is very possible that many of them are not necessarily relevant for the debtor. The mortgage adviser can actually locate the most relevant funds for the debtor and present his case in the most accurate and appropriate way. "In order to maximize the chances of success of the application and ensure that the repayment terms are as favorable as possible. It is important to note in this context that the non-banking solution is only suitable for debtors who have a lienable asset."

- Who can benefit particularly from contacting a non-banking entity?

"There are many bankruptcies who can in principle get fired and all that separates them from the new beginning they so long for, is a significant amount of money. Pledge of the property in their possession to a non-banker in exchange for a mortgage, is a move that can certainly rescue them from the complex situation." "We need to take into account that this is a loan that is not the same as the bank mortgage. For example, this is a much shorter repayment period, so in the analysis we perform for our customers, the repayment ability is among the first things we check."

- What is the most important message you would like to convey to surfers?

"It is important for me to send an optimistic message to mortgage refusers, emphasizing debtors who need a significant amount of money: even if the bank refused to give you the amount you need and even if everything seems lost at the moment, do not give up. Instead, consult a qualified and experienced mortgage adviser. In order to formulate a strategy that will allow you to obtain the required amount.

I am also interested in contacting attorneys who deal with insolvency or debt settlements. In many cases, a situation has arisen where the lawyer has managed to reduce his client's debt by half a million shekels to 200,000 shekels. On the face of it, this is a very impressive achievement and you probably need a very skilled lawyer to be able to reduce the debt in this way. Unfortunately, many debtors have no ability to repay a debt of NIS 200,000, so despite the significant reduction, we still have no realistic horizons. "On the

other hand, in the event that the customer has a property that he owns, we have the option of locating a financing fund for him that will be happy to mortgage the property, provide him with the amount needed for him to open a new page and provide a real horizon for the recovery process."

To the Ariel Finance website

Phone: 072-3295311

Article courtesy of Zap Legal The

information presented in the article does not constitute legal advice or a substitute for it and does not constitute a recommendation to take proceedings or avoid proceedings. Anyone who relies on the information in the article does so at his own risk

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