WARNING: This is Version 1 of my old archive, so Photos will NOT work and many links will NOT work. But you can find articles by searching on the Titles. There is a lot of information in this archive. Use the SEARCH BAR at the top right. Prior to December 2012; I was a pro-Christian type of Conservative. I was unaware of the mass of Jewish lies in history, especially the lies regarding WW2 and Hitler. So in here you will find pro-Jewish and pro-Israel material. I was definitely WRONG about the Boeremag and Janusz Walus. They were for real.
Original Post Date: 2008-04-20 Time: 00:00:00 Posted By: Jan
The days are now over when lender banks could repossess a mortgaged home for as little as R10 and pocket all the profit, leaving the former home owner to keep paying off the full debt.
This comes after the R10 house row reported by the Cape Argus last April, in which a home owner won his battle with the bank to keep the house after it had sold it off.
Neville Melville, the Ombudsman for Banking Services, has instructed banks to credit a defaulting borrower’s account with any profit remaining on such sales after banks have recouped the principal debt, interest and holding costs.
This instruction could have far-reaching implications, because any home owner who lost out in this way now has recourse under an investigation by the ombudsman.
| ‘This comes after the R10 house row reported by the Cape Argus’ |
Cape Town lawyer Malcolm Roup says the same “no-profit” principle should apply to other repossessed assets, including cars.
“Many repossessed cars are sold for much higher prices, which the client never sees,” said Roup.
Attorney Pieter van der Riet said it was only fair that the proceeds of a repossessed home should ultimately be credited to the former owner.
In a statement on Monday, Melville said banks were not permitted to pocket a profit from the resale of a home they had repossessed.
Any such profit had to be credited to the borrower’s account after the banks had recouped the principal debt, interest and holding costs.
| ‘Banks were not permitted to pocket a profit’ |
Melville was reacting to a complaint to his office, which he said had prompted him to seek legal clarity on “what is rapidly becoming an everyday scenario”.
The complaint was from a client who had defaulted on a home loan. Instead of the property being sold in execution, the bank bought the house back for R100, selling it later for a much higher price.
But the bank credited the defaulting client’s home loan account with just the R100, not the price for which the property was eventually sold.
The complainant was then held liable for the outstanding balance.
Now Melville has told banks that such procedures are invalid, and fly in the face of common law and the Code of Banking Practice.
In a bulletin to the banking industry late last week, Melville said the banks were not allowed to make a “profit” out of the resale of the property.
Any such “profit” had to be credited to the borrower’s account.
But if the resale price left a shortfall on the loan amount owing, the debtor will remain liable for the balance.
Melville said he believed his recommendation to banks would make a difference to struggling home owners.
“I hope that our involvement in cases like this one will serve to educate consumers about their rights, negating the need for protracted conflicts and personal heartache down the road.”
He advised home owners who ran into financial difficulties to market the property themselves before the bank could foreclose on the home loan.
“Sometimes hoping for better days makes the matter worse, as interest and legal costs mount quickly,” Melville said.
Logan Balakrishna, manager of the complaints administration department at the ombudsman’s office, told the Cape Argus on Monday: “If anyone has that type of a complaint, they are free to approach us.”
Last year the office had handled 397 complaints relating to home loans, or 17,5 percent of the total, making it the second largest category of complaints received.
The Standard Bank has responded to the ombudsman’s statement by denying it profits from the sale of repossessed homes. “We fully support the ombudsman’s decision,” said Erik Larsen, bank media manager.
Mornay van der Merwe, general manager of Absa Bank in the province, said the bank would issue a statement later on Tuesday.