The Tamil Selvi housing loan story

The plight of a widow who could lose her home despite negligible bank loan arrears

We might have difficulty servicing our debt

Tamil Selvi was devastated when she lost her husband S Chirtanthan suddenly in early 2021.

But she wasn’t able to mourn his loss in peace thanks to a nightmarish turn of events sparked by the slip-ups of CIMB, which had provided the couple a housing loan 20 years ago. 

Barely a week after her husband’s death, Tamil Selvi was confronted by the shocking news that the house they were living in had been auctioned off by the bank earlier and since then belonged to someone else!

In 2001 Tamil Selvi and her husband took a joint housing loan of RM73,700 from Bumiputra-Commerce Bank Berhad (later acquired by CIMB Bank Berhad) to buy a house in Ipoh. They were committed to paying up their monthly instalments but incurred a three-month default when Chirtanthan suffered a stroke and lost his job in late 2019.

With the drop in income, Tamil Selvi had difficulty paying the monthly instalments of RM700 with her RM1,200 minimum wage as a school cleaner but her request to reduce the instalment sum was apparently not entertained by CIMB.

In February 2020 Socso declared her husband invalid and approved his invalidity pension. By this time, Chirtanthan’s physical and mental health had deteriorated considerably, forcing Tamil Selvi to take over servicing the house payments.

Tamil Selvi informed CIMB’s Menglembu branch of her husband’s status and passed them his Socso documents. At the same time, she enquired about the use of the mortgage-reducing term assurance (MRTA) to settle part of the loan. Both husband and wife had purchased the MRTA back in the year 2001. 

But the bank staff could not locate the MRTA documents in the system, and so the coverage that availed itself upon invalidity was never used to lend them a hand. The MRTA could have more than covered their arrears.

But worse was to happen. Despite all the challenges of 2020, the first year of the pandemic, the couple managed to pay most of their monthly instalments, and even double the following month if they defaulted any month. In September 2020, out of the blue, they received a letter titled “Pengishtiharan Jualan” (announcement of sale). 

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As was her practice, Tamil Selvi took the letter to the CIMB Menglembu branch to seek clarification.

The bank officer herself was surprised at the auction notice, saying it was unlikely that the loan could be foreclosed for her arrears of just RM2,567 [the couple still had over RM40,000 of the loan to settle]. She advised Tamil Selvi and helped her forward her appeal to the bank head office.

There was no reply, and Tamil Selvi continued paying, and the bank continued accepting the monthly instalments right until her husband’s death. 

Tamil Selvi’s husband died in February 2021. Five days later, she went to the CIMB branch office to inform them.

After consulting their head office, the staff told her she needn’t make any more payments, as the house had been completely paid for. 

Still teary after her bereavement, Tamil Selvi couldn’t fully make sense of what was going on, but anyhow it was welcome news. Perhaps this was the MRTA kicking in, she thought.  

However, the same night the bank dropped a bombshell that has continued to cause her endless distress and anxiety. A CIMB headquarters officer called Tamil Selvi to tell her she had to move out, as her house had been auctioned off earlier, and they needed her bank account details to deposit the balance of the money. 

Ten days later, Tamil Selvi received a letter from CIMB head office saying the couple had “completed the loan tenor and fully settled all the outstanding with the bank”. It corroborated what the branch office had told her about not having to pay for the house anymore. Was the house still hers then?

Obviously, CIMB had committed a major blunder. Even though it was the period of the pandemic when the government itself was advising banks to refrain from foreclosing housing loans, it went ahead and auctioned off the house of a client who was not a regular shirker. 

And it appears that the CIMB branch in Menglembu did not know that one department in their head office had decided to auction the house. As a result, the Menglembu branch kept reassuring Tamil Selvi that everything was OK.

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If the bank had kept proper records, they would have located the MRTA documents and would not have proceeded with the auction process when the client was declared invalid by Socso.

Initially, the bank which gave them the loan was Bumiputra-Commerce Bank Berhad. It appears as if CIMB never fully transferred the file upon taking over. Why should the borrower pay for the bank’s alleged failure to exercise due diligence when taking over the loans of another banking entity?

Tamil Selvi was going virtually every month to the bank branch in her area to pay the monthly instalments but never once was she informed her house was in the process of being foreclosed.

Tamil Selvi would never have suspected it, as her payments were received without any problem by the bank. Will a client continue paying instalments if she or he is aware the house was in the process of being auctioned off? 

Though the bank now claims otherwise, the only document they received prior to the auction was the announcement of sale in September 2020 for the auction to be held in October 2020. But the branch office felt that a mistake had been made and helped her to send an appeal to the bank’s head office. 

Everything was quiet after that, and Tamil Selvi continued paying the monthly payments. Unknown to her, the house had been sold off at an online auction in October 2020, but the bank continued to accept her payments even after that.

Lawyers say that there are strict laws governing auctions, an important aspect of which involves regular and documented communication with the person whose property is going for auction. Tamil Selvi only received the announcement of sale. No shocking phone calls, and none of the harassment she has received on the phone after her husband passed away.

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When a bank fouls up in this manner, it has the option of admitting its mistakes, which include:

  • initiating the foreclosure/auction process for a failure to pay for about three months because of a serious illness suffered by Chirtanthan (stroke)
  • initiating the auction process in the middle of the Covid pandemic
  • failing to initiate the MRTA application when Tamil Selvi informed them of her husband’s Socso disability award
  • giving incorrect advice when Tamil Selvi went to the branch with the letter regarding the auction

Doesn’t corporate social responsibility (CSR) require that a bank should sincerely try to make amends for this series of errors?

Sadly, CIMB has chosen to deny everything and defend its actions, thereby prolonging the misery of its own customer, whom CIMB failed to serve in an appropriate manner. 

Tamil Selvi is fortunate that the buyer of her house has been magnanimous. Tamil Selvi refers to her house as her temple, and she has a strong emotional attachment to it.

In view of this, the buyer has offered to give up her claim and sell the house back to the bank. She has decided against evicting Tamil Selvi and her daughters until CIMB settles the matter. She has offered to rent the property to Tamil Selvi and family till the issue is resolved.

But CIMB has chosen to be arrogant and irresponsible*. A wealthy corporate entity – with pre-tax profits of RM5.3bn for the first nine months of 2021 – messes up big time and aggravates the already difficult circumstances of a widow.

Instead of resolving the problem by buying back the house and returning it to Tamil Selvi – minus any unpaid instalments from her – it has decided to use its financial power to justify its actions and defend itself. Shame on you, CIMB!

Note: Following protests and media publicity, a CIMB representative has reportedly called Tamil Selvi and told her the bank wanted to help by communicating with the new house owner to see how it could resolve the problem.



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