A horror mortgagee sale mix-up has resulted in a woman losing all her possessions.

Her home was sold after she missed payments on the mortgage, but a case note from the Banking Ombudsman scheme reveals, the bank brought forward the settlement date without telling her.

All her possessions, including irreplaceable home videos and photos were inside when the buyers took possession, as well as family mementoes and children's toys.

"The new owners wouldn't allow access and refused her request to have her belongings returned," the ombudsman case note said, and the bank did not lift a finger to help.

The woman made a complaint to the Banking Ombudsman scheme, which found the bank was not responsible for all her loss.

The Banking Ombudsman scheme is headed up by Nicola Sladden and provides people an alternative to taking their complaints to court.

It guarantees anonymity to both parties to a complaint, so the bank remained unnamed.

"Following an auction, she was advised of the settlement date," the ombudsman case note said. "She had already moved out, but most of her belongings were still at the property."

"Unbeknown to her, the bank brought forward the settlement date. This meant she was denied the opportunity to retrieve her possessions. Not knowing that the purchasers were now in the house, she arranged for movers to collect her chattels."

"The new owners wouldn't allow access and refused her later request to have her belongings returned."

"In our view, the borrower/property owner has the right to know when their right to possession has ceased," the case note said.

"While the bank was entitled to agree to the new purchaser's request to an earlier settlement date, we would expect it to arrange for the incumbent borrower/property owner to be informed of the settlement date, and to be informed if a previously advised settlement date had been changed."

"This would enable that person to make any necessary arrangements for their chattels."

The ombudsman said following a mortgagee sale, the new owner was usually more helpful in allowing for retrieval of the former's owner's property.

But, the case note said: "We also observed that when she first raised this issue with the bank it did not assist by contacting the purchasers or their solicitors to try to persuade them to co-operate."

The woman complained to the Police, but was told it was a "civil" matter meaning she would have to go to court seeking the return of her belongings.

The ombudsman recommended the bank pay her $13,500, which was made up of $500 for "distress", $8000 for "personal inconvenience" and $5000 towards her legal costs.

Although the woman was "disappointed" at the level of compensation, she accepted it.

Real Estate company Barfoot and Thompson said the terms of mortgagee sales differ from those of ordinary property sales.

"For example, most mortgagee sales are not offered for sale with vacant possession and do not include chattels in the sale," it said.

That meant there was no guarantee they would get the house without finding the old owners had stripped out fittings, or even that they had moved out, as happened to one Alexandra woman in 2014.

There are some legal protections in a mortgagee sale for the old owners. Mortgagee sales must be properly conducted, and the seller, usually a bank, must seek a market price.

Buyers do face extra risk when buying at mortgagee sale, so prices are usually lower than for houses that are not subject to a forced sale.

In hot property markets like Auckland, there are very few mortgagee sales.

Usually, banks give people who have failed on their mortgage payments time to sell their homes themselves to avoid the stigma of a mortgagee sale.