Equitable mortgage leaves home buyers susceptible to frauds

Anbarasan Appavu

CERSAI is available to buyers, so they can protect themselves from any kind of real estate scam by using it. You can look up the mortgage information for any piece of land that you are interested in purchasing to determine whether or not there are any mortgages associated with it.

Mortgage Frauds
Even though there is a growing hope that the MCLR will contribute to a more rapid transmission of policy actions, the agency has stated that this will only be possible if the lending institutions reduce their deposit rates.

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As a result of banks' increased willingness to engage in equitable mortgage, which allows customers to obtain loans in exchange for pledging their property documents, obtaining loans has become easier in today's society. However, there are a lot of unpleasant realities that come along with having an equitable mortgage. Because of a flaw in the system, dishonest individuals are able to obtain multiple loans using the same property.

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There are numerous examples of builders who have vanished after pledging the entirety of the property to banks in order to obtain large sums of money, leaving behind unfinished construction projects. Buyers would have purchased units in the project, then obtained home loans to finance the purchase of the same property. After this occurs, the banks that the buyers use are unable to track down the loan that was taken out by the builder with the initial bank. Because of this, buyers are unable to get the apartment registered in their names until the builder has paid off his debts and the property has been released from the control of the first bank.

Because they are unable to get a hold of the property, the financial institutions that have provided buyers with loans are also in a difficult position.

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Drawbacks of equitable mortgage

The equitable mortgage is a straightforward approach to obtaining a loan; however, it contains a number of loopholes that can be exploited to deceive financial institutions. The fact that any charge that is added to the property as a result of an equitable mortgage is kept secret from the general public is the primary drawback associated with this type of mortgage. In contrast to a registered mortgage, an equitable mortgage held with a bank or any other type of financial institution does not appear in any public records. There is a possibility that this loophole will be exploited in order to obtain loans on the same property from multiple banks.

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Establishment of a Centralized Registration System

Under the provisions of chapter IV of the SARFAESI (Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest) Act, the central government has created a central registry of mortgages with the intention of putting an end to fraudulent activities involving loans. Since March 31, 2011, India has been home to an organisation that goes by the acronym CERSAI, which stands for the Central Registry of Securitisation Asset Reconstruction and Security Interest of India.

It is impossible for anyone to take out a second loan on the same piece of property because CERSAI is a centralised agency that keeps records of equitable mortgages and shares them with all banks. By logging on to the CERSAI website, individuals and financial institutions are able to check the liability status of any parcel of land or plot of land by accessing the information regarding equitable mortgages, which has been made public.

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Is it required to register mortgages with CERSAI?

Within thirty days of the closing of a mortgage transaction, the Central Government has made it mandatory for all banks, NBFCs, and HFCs to register the relevant details of the transaction with CERSAI. It doesn't really matter if this is actually being carried out to the letter or not at this point.

On the other hand, for mortgage loans that were taken out before this initiative was implemented, the banks are not obligated to share any information regarding the loan with CERSAI. After the 31st of March in 2011, all loans that were facilitated must comply with the mandatory disclosure of mortgage information.

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Where to buy CERSAI

CERSAI is available to buyers, so they can protect themselves from any kind of real estate scam by using it. You can check the mortgage details of any piece of land that you intend to buy to determine if there are any mortgages associated with the plot of land. 

You are able to verify the records of any property by going to the CRESAI public search portal at https://www.cersai.org.in/CERSAI/JSP/IBACRPaymentGateway.jsp and paying a nominal fee of Rs 50. The mortgage database is made to public by CRESAI.

As a result of the passing of the SARFAESI Act, it is now illegal for anyone to hold multiple loans against the same piece of property.

If more property buyers were aware of this facility, it would be much easier for them to avoid falling victim to scams related to real estate and other types of property.

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