Financial Credit Rehabilitation
Home > Finance > Credit RehabilitationNew Heights Finance has been awarded a full FCR ( Financial Credit Rehabilitation) licence agreement with a well established Bond Originator, who has developed a Financial Credit Rehabilitation product, which unlocks the equity in homeowners property and uses this equity to settle debts and normalise client credit records.
Backing
This Financial Credit Rehabilitation product has been developed in conjunction with and is underwritten by, a niche South African bank which is 49% owned by one of the “big four” South African banks and is administered through the home loans division of this bank, once bonds aree approved.
Development
It has taken months to develop and fine tune the IT system, millions of Rands in investment to establish this product and now an intensive marketing campaign has been embarked upon to offer this unique product to homeowners that need assistance to settle their debts and to creditors who need their debtors debts settled. The product was officially launched in September 2006. The full electronic service was launched in February 2007 and is now offered country wide.
Target Market
The target market for this product is any Homeowner who :
- has debt e.g. Municipal rates, Credit Cards, Retail accounts, Motor Vehicle accounts and so on and
- has credit bureau listings commonly referred to as ITC listings.
The Process
Our system essentially arranges a new mortgage bond for the client ( even though they have ITC listings and adverse payment performance) and in so doing unlocks the available equity, which is then utilised to settle the arrears accounts and outstanding debts.
The “further bond” or “second bond” method of unlocking equity in property, is a common method used by homeowners who have a good credit record but this facility has been denied to homeowners that have a poor credit record. We now have the solution to this situation.
Key to Success
The key to the success of our FCR product is that we now, for the first time in the history of banking in South Africa, can assist those persons with poor credit records with the support of the bank and its financial resources, by applying the same methodology as is done to clients with good credit records. No discrimination at all between clients with normal and poor credit records!
Financial Controls
In the interest of financial control, the bank in conjunction with our head office, has appointed its own accredited attorneys to undertake the legal processes and financial disbursements. This ensures that the outstanding debts are paid, all judgements are rescinded and the clients’ credit record is normalised.
Compliance with Legislation
The spirit of the New Credit Act is to prevent reckless lending and to rehabilitate those that are being held back due to financial circumstances, which in many cases were beyond the control of the client.
All aspects of our FCR product are in full compliance with the provisions of the new act.
The Focus
Our focus is on credit rehabilitation of those who find themselves in difficult financial circumstance, by undertaking a full debt consolidation, financial planning, debt settlement and credit normalisation exercise, using the clients property as the source of income.
Main Criteria Applied
Affordability
No credit will be granted to any client unless they can prove affordability. In other words all homeowners who are granted further bonds through us have to demonstrate that they can afford to service the new mortgage bond. No reckless lending is permitted.
Equity
Only homeowners who have residual or free equity in their homes can make use of this process.
We are essentially “unlocking” the equity ( growth in value) in the clients property to settle the debts. If there is no free equity in the property, then we cannot help. If there is free equity we can use this to settle debt. If the debt exceeds the equity we cannot help. If the equity exceeds the debt then we can in most instances assist homeowners.
Credit Rehabilitation Finance Pre-Qualifying Criteria
Costs
An additional and very key element to this product is that the client pays for the services out of the equity in their property. The Creditor does NOT pay anything. The debtor does also not have to lay out any money up front, for the process to take place. Fees are charged to the client on registration of the new bond, at the end of the credit rehabilitation process and after all debts have been settled.
Performance
To date hundreds of bonds have been approved and hundreds of thousands of Rands worth of debt have been settled on behalf of clients.
Applications for assistance are coming into our system at a tremendous rate. A new generation of credit rehabilitated clients are now starting to get back into mainstream life, free of un-manageable debt and the stress that goes with this.
Creditors have welcomed this product as they have been able to reduce the bad debt on their books, reduce their processing costs, reduce their legal and other costs.
We invite you to contact us to discuss this incredible innovation in the debt and home loans arena.
