News | Opinion
A class action brought against major banks is seeking to recover billions of rands in lost home equity as a result of selling the houses for far less than their value.
Based on a sample of almost 12,000 repossessed properties, the R60 billion class action suit brought by Lungelo Ditokelo Human Rights Foundation found these properties were sold for 50 to 60% of their proper value.
Most were sold through sheriff’s auctions. Garth Zietsman, a statistician who analysed data from the National Credit Regulator, said: “Our South African banks sell property about five times more than the international average as a percentage of the total number of outstanding bonds and 20 times more than best practice.”
What’s worse is that “lower-valued homes were sold for about 40% of their market value, against 81% for the higher-valued ones”.
King Sibiya, head of the Lungelo Ditokelo Human Rights Foundation, lashed out at the banks, saying: “Here we are in the middle of a Covid crisis when millions of people have fallen into arrears on their homes through no fault of their own and the government imagines it is business as usual, where banks can carry on like they have done for decades.
“Other countries impacted by Covid put a total freeze on evictions, while we imposed a freeze of three months. Three months? There’s no justice in that.”
While the banks have naturally hit back at the class action, defending their actions, surely they should realise these are exceptional circumstances.
Some banks have argued that they not only granted customers a three-month freeze, but a further flexible three months repayment plan.
As Standard Bank correctly states, “when a property is attached, everybody loses”.
This is exactly why more engagement between the client and the banks should take place before drastic steps are taken.
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