South African banks are about to be hit with an avalanche of more than 100 legal suits from home owners whose properties were repossessed and sold at auction for a fraction of their value.
The dispossessed home owners are demanding a total of more than R20 million in compensation from the banks, and a change in the law to outlaw the practice of selling houses at auction for a fraction of their worth. After years of taking it on the chin, banking customers are starting to fight back, using the Constitution as their primary legal weapon.
While the cases are being brought individually, they are being coordinated by a group of attorneys across the country.
It is reckoned that upwards of 10,000 homes are repossessed each year by the banks. The majority are sold at auctions for a fraction of their market value – in some cases as low as 10% of their worth. At a conservative estimate, if each home is sold at auction for roughly R300,000 less than its market value (the actual figure is reckoned to be higher than this), ordinary South Africans have lost more than R60 billion over the last 20 years.
In many cases, it is the banks that repurchase these homes for their own benefit and then resell them at market price. In such cases, they still come after the defaulting borrower for the outstanding amount.
The bank receives the proceeds of the sale less the auctioneers’ fees, and then demands that the home owner repay the difference between the proceeds of the sale and the value of the mortgage bond…
photo credit: Team Lane via photopin cc
South Africa Today – South Africa News
