Purging mortgage default : comments on the right to reinstate credit agreements in terms of the National Credit Act
CITATION: Brits, R. 2013. Purging mortgage default : comments on the right to reinstate credit agreements in terms of the National Credit Act. Stellenbosch Law Review = Stellenbosch Regstydskrif 24(1):165-184.
The original publication is available at https://journals.co.za/content/journal/ju_slr
Section 129(3) and (4) of the National Credit Act provides debtors who are in default with their credit agreements with the right to reinstate such agreements by paying the actual amounts that are overdue as well as permitted default charges and enforcement costs. Particularly in the mortgage foreclosure context, this mechanism provides relief for credit consumers and it might just be the last opportunity for mortgage debtors to save their homes. Mortgagees are traditionally entitled to refuse the late payment of home loan instalments and therefore to continue with foreclosure, the result being sale in execution of the home. However, the Act has changed this state of affairs and now allows debtors to prevent and even reverse the creditor's election to foreclose by complying with the requirements for reinstatement. Therefore, the operation of acceleration clauses is now qualified by the principles of reinstatement. It is possible to reinstate the mortgage agreement after judgment has been granted, and even after the property has been declared specially executable and attached. However, from the point that the property is sold at the auction, reinstatement is no longer possible. The result of reinstatement is that the attached property is released from the execution process and returned to the debtor. The credit agreement will continue to operate as it did prior to default.