The Credit Ombudsman Service Limited (COSL) has published a Position Statement describing how it deals with complaints when a borrower seeks a stay of the lender’s execution of default judgment orders relating to a loan which is secured by residential property.

While it cannot interfere with or overturn default judgment orders, COSL may determine that execution of the orders may be stayed where the borrower:

(a) can demonstrate that it is likely they can sell the security property themselves within a reasonable time;
(b) can establish that they expect, in the very near future, to be able to refinance the loan which is the subject of the default judgment;
(c) can show that they are suffering from personal (as distinct from financial) hardship1 and need a reasonable time to organise their affairs ; or
(d) has reasonable grounds to apply to have the default judgment set aside altogether, for example:
(i) the orders made in the judgment appear to be irregular, or
(ii) the judgment was obtained in contravention of a legal requirement, or
(iii) there is a substantive defence available to the lender’s claim, and the borrower can show that they will apply to set the default judgment aside, but needs more time to prepare their case.

However, COSL will not order a lender to:
(a) take action which would require the lender to act in any way contrary to an order made by the Court, unless there are reasonable grounds for expecting that the lender could successfully apply to the Court requesting the Court to vary its orders to permit the lender to comply with our order;
(b) suspend the sale of the security property to a third party once the lender has entered into a binding contract for the sale of the property.