Banks to be sued over repossessions

Posted 06 May 2015 Written by Shanti Aboobak

It's finally happening. A class action suit being brought by the Housing Class Action against the four major banks to stop them selling repossessed homes at auction for a fraction of their value, according to The Star.

A class-action lawsuit to force banks to stop repossessing the homes of South Africans and then selling them off at a fraction of their value is expected to be heard in the high court.

Fifty people, represented by Housing Class Action, are taking the country’s four major banks, Nedbank, Absa, Standard Bank and FNB, to court. They want either their repossessed property returned or substantial monetary compensation.

While banks often reject allegations that they care little for ordinary South Africans, the human rights group says it has records of houses being sold for R200 or R300, with the worst case being a house sold for R10.

“In most cases, properties are sold for 30 percent below market value,” the organisation said on Tuesday.

It has taken on the services of advocate Duncan Shaw, a specialist in banking law from Scotland.

“This matter may become a class action whereby the banks might have to pay back everyone in the country in the same position,” said the organisation, which is linked to the Financial Services Sector Campaign.

It said Shaw had studied the practices in other countries and found that most - if not all - the other countries require banks to sell repossessed homes at market value.

It said that despite the constitution and the country’s laws, the judiciary, sheriffs and the police acted contrary to the law in most cases.

“Whatever the law and the constitution say in defence of the people, in real, practical terms, working-class black people do not have the right to own property in certain areas in South Africa in 2015,” the organisation said.

It also plans on hauling other institutions to court which it believes have acted negligently in allowing the repossession to take place and the homes to be sold for less than their market value.

The group’s spokesman, Ian Beddowes, said they had put together a 200-page submission, but a court date had not been set.

“We’ve been up against syndicates which involve the courts, the police - people don’t want to deal with the issue of evictions. Most evictions are illegal and against the laws of South Africa,” Beddowes said.

“In South Africa, we have one of the most predatory banking systems in the world. The banks consistently do not comply with the provisions of the act that deals with repossessions.”

On Tuesday, Absa rejected the allegation that it was selling repossessed homes far below market value.

“As we have said previously, Absa does its utmost to ensure that our customers remain in their homes. With regard to sale in execution, auctions are a last resort after the bank has exhausted all possible rehabilitation solutions and resources available to the bank to recover the bad debt,” the bank said.

It said it had established a programme in 2011 to assist financially distressed home-owners to sell their properties privately before having the bank get involved.

“This programme is aimed at ensuring the highest possible price for the property is reached, as it is clearly in our and our customer’s best interest.”

FNB Home Loans head of operations Calvin Ndlovu said that if a property was purchased at a public auction, it was auctioned by the sheriff on behalf of the court.

“The bank has no authority over the auction process and therefore refers you to the sheriff’s department involved in the particular claim(s) made,” Ndlovu said.

The views expressed herein are those of the author and do not necessarily reflect those of Acts Online. Acts Online accepts no responsibility for the accuracy, completeness or fairness of the article, nor does the information contained herein constitute advice, legal or otherwise.