Collections
We encourage borrowers to familiarise themselves with solutions to payment difficulties if they anticipate having problems paying off their loan and contact the fund to seek solutions.
If the obligations according to the bond are not met, the borrower must pay late payment interest according to the decision of the Central Bank of Iceland. Furthermore, late payment fees can be added to the loan. In the event of default, LSR is authorised to call in the entire debt without notice. As a last resort, the property may be subject to foreclosure if payments are not made.
Actions Due to Default
If there is a default on the repayment of loans, the following letters are sent out with the associated costs according to tariff:
- 30 days in arrears: Reminder
- 60 days in arrears: Final reminder
- 90 days in arrears: Collection letter
- 120 days in arrears: Payment challenge issued to mortgagees and borrowers
- 150 days in arrears: Foreclosure request sent to the District Commissioner
If the borrower contacts the fund and negotiates payments due to default, a payment deferment is recorded. Then the collection process stops after 90 days and considerable collection costs can be avoided. However, the above only applies if the loan is not in a foreclosure process, and it is therefore always recommended to contact us as soon as possible if the loan is in default. It is best to send a mail to lan@lsr.is or call the credit department on 510 6100.