'Banks not hard on bond defaulters'

'Banks not hard on bond defaulters'

Banks were not quick to foreclose on bond defaulters because they only recovered about 55 percent of the outstanding debt when properties were sold at auction.

"There is a misconception that banks adopt a hard-line approach in these matters," advocate Dees Ramdhani, acting for SA Home Loans, submitted in the Durban High Court last week.

His comments were in the wake of recent criticism levelled against financial institutions by Judge Rashid Vahed for adding legal costs to defaulter's bills without court sanction.

Before him was an application by Changing Tides 17, Pty Ltd - the trustee of SA Home Loans Guarantee Trust - which was suing Newlands West home owner S'thembiso Mbazana, asking for judgment and an order declaring his home specially executable.

Judge Vahed noted that Mbazana had been charged legal fees, before any court had made any costs order.

He said it was also evident that Mbazana had made some monthly payments "and if you take off the legal fees, there is very little left in arrears".

He suggested that SA Home Loans settle the matter.

When the same application came before Judge Kevin Swain last week, Ramdhani said the matter had been settled. He said he had been instructed to tell that the court that the banks always made a concerted effort to resolve the matter before heading to court, because they recovered very little at auction.

"There are various internal departments at SA Home Loans which make contact with the bond holder at various stages in an attempt to rehabilitate the account prior to the matter being handed over to attorneys. The attorneys, in turn, try to settle the matter without having to foreclose on the property."

Judge Swain suggested that in future matters, these endeavours should be set out in the bank's affidavit before the court.

The Mercury


Denny Crane

Denny Crane
It's not me ... yet. Denny Crane from the TV series Boston Legal. Click on picture if you're not sure who he is!