Banks hit with class ac­tion


The Citizen (KZN) - - Front Page - Ciaran Ryan Money­web

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.

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