Banks hit with class action
DAMAGES: DISPOSSESSED FILE SUIT
It is estimated that up to 100 000 people have lost their properties through foreclosure.
Hundreds of dispossessed homeowners filed a class action suit in the High Court in Johannesburg on Tuesday, claiming damages from the major banks for foreclosing and then selling their properties for a fraction of their market value.
The dispossessed homeowners are asking to be recognised as a class of applicants with substantially the same complaints. Many are clients of the Lungelo Lethu Human Rights Foundation, which is an applicant in the case.
The application asks the court to recognise several different classes including:
Those whose properties were sold for more than 10% below market value since the constitution came into effect in 1994;
Those who remain in debt to the bank after their properties were sold at prices below market value.
All the major banks are cited as respondents, as well as the National Credit Regulator, the SA Human Rights Commission and the minister of constitutional development. It is estimated that up to 100 000 people have lost their properties through foreclosure since the constitution came into effect.
This is an opt-out class action, meaning that anyone who fits within one of the class categories is automatically assumed to be part of the action.
It has been estimated that dispossessed homeowners have suffered a 35% loss of home equity through the foreclosure process, which means the banks could be facing claims of R60 billion or more.
Advocate Douglas Shaw, legal representative of the applicants, said the mortgage banks have routinely claimed they use foreclosure as a last resort, but the evidence suggests otherwise.
“Foreclosure was cruel and inhumane,” said Shaw.
King Sibiya, president of the Lungelo Lethu Human Rights Foundation, said the case was vital to restoring human rights and dignity for those stripped of their homes.
Until December 2017, foreclosed properties were sold at sheriffs’ auctions without a reserve price, which resulted in some properties being sold for as little as R100 (and even R10), leaving the defaulting homeowner with a substantial debt to the bank.