CityPress - - Business - AN­GELIQUE RUZ­ICKA busi­ness@city­press.co.za

Your joint mort­gage may form part of your part­ner’s debt re­view with­out your con­sent

If you are mar­ried in com­mu­nity of prop­erty and your spouse is placed un­der debt re­view, so will you be be­cause you share a joint es­tate that in­cludes all debt.

How­ever, what if you are mar­ried out of com­mu­nity of prop­erty, di­vorced or if you have taken a joint mort­gage with a friend or rel­a­tive?

If the other party to the joint mort­gage is placed un­der debt re­view, what rights do you have?

In the­ory a debt coun­sel­lor is sup­posed to in­form the other bond holder about the debt re­view ap­pli­ca­tion of their client.

So said Nthu­pang Magolego, se­nior le­gal ad­viser at the na­tional credit reg­u­la­tor, adding: “This no­ti­fi­ca­tion will give the con­sumer who has not ap­plied for debt re­view an op­por­tu­nity to con­sider var­i­ous op­tions that may be avail­able. The con­sumer who has not ap­plied for debt re­view will not be flagged at the credit bu­reaus.”

How­ever, this does not ap­pear to be hap­pen­ing in prac­tice as a reader dis­cov­ered when her former part­ner put him­self un­der vol­un­tary debt re­view.

“He signed over his power of at­tor­ney to a debt coun­selling com­pany and rene­go­ti­ated our monthly home loan re­pay­ments with­out him or the debt coun­sel­lor telling me. I found out by ac­ci­dent as the home loan re­pay­ments come off my ex’s ac­count each month by debit or­der.”

She asked for the home loan to be re­moved from the debt re­view, but nei­ther her ex nor the debt coun­sel­lor were will­ing to do so. The bank re­fused to re­move the joint home loan from the debt re­view process and the in­ci­dent turned into a blame game with the bank blam­ing the debt coun­selling com­pany for ap­ply­ing for debt re­view on a joint home loan with­out both par­ties’ con­sent and the debt coun­selling com­pany blam­ing the bank for not in­form­ing him or her it was a joint home loan when the bank sent through the cer­tifi­cate of bal­ance (CoB).

So, what ac­tu­ally should have hap­pened, who is re­spon­si­ble for what and what are the rights of the reader in this re­gard?

Paul Slot, the head of the Debt Coun­selling As­so­ci­a­tion of SA, said the is­sue of how to han­dle joint mort­gages un­der debt re­view is not clearly de­fined in the Na­tional Credit Act, hence the con­fu­sion.

“Joint mort­gages are not catered for in the Na­tional Credit Act and are very prob­lem­atic. This topic has been un­der dis­cus­sion at the Credit In­dus­try Fo­rum set up by the NCR for the past 10 years.”

Slot’s un­der­stand­ing of the law is that the onus is on the bank, not the debt coun­sel­lor to in­form the client. “The debt coun­sel­lor does not need to ob­tain the con­sent of the non-debt re­view part­ner as the debt coun­sel­lor has no le­gal re­la­tion­ship with the non-debt re­view con­sumer. It is the client un­der debt re­view, who is re­spon­si­ble for sup­ply­ing the fi­nan­cial in­for­ma­tion and pay­ment com­mit­ment from the non-debt re­view con­sumer. On the other hand, the credit provider [bank] has a le­gal re­la­tion­ship with both con­sumers and they should in­form both par­ties of the debt re­view ap­pli­ca­tion but they don’t al­ways do this.”

Although the joint mort­gage can form part of the debt re­view process with­out the con­sent of the part­ner, if the part­ner is not overindebted, he/she can­not be in­cluded in the debt re­view process and it should not af­fect the part­ner’s credit record.

Slot ex­plains how the process works:

• If a con­sumer ap­plies for debt re­view and a joint mort­gage is present, the bank will no­tify the debt coun­sel­lor on the CoB that the mort­gage is a joint mort­gage;

• If the non-debt re­view bond holder is not overindebted, that per­son would not form part of the debt re­view un­less mar­ried in com­mu­nity of prop­erty;

• If the bond is paid in full by the non-debt re­view con­sumer then the bond can be ex­cluded from debt re­view;

• In other sit­u­a­tions the debt coun­sel­lor should re­quest the debt re­view ap­pli­cant to ob­tain the non-debt re­view con­sumer’s fi­nan­cial com­mit­ment to pay the bond (this may in­clude de­tails of in­come and ex­pen­di­ture) and that pay­ment should be made di­rectly the bank; and

• No credit provider or debt coun­sel­lor has the statu­tory power to re­move a bond from debt re­view un­less the non-debt re­view part­ner has been pay­ing 100% of the bond.

Con­sid­er­ing this le­gal mine­field, if you are go­ing to en­ter into a joint home loan, make sure you have a sep­a­rate agree­ment as to what hap­pens if one of you can no longer pay or is put un­der debt re­view.

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