PROPERTY
N E H W S T H IG R R U KNOWING YO N IO S S E S S O P E R E M FACED WITH HO
Y
our home is your refuge from the world, a place to raise your family and often the biggest financial commitment that you will make in your lifetime. However, thousands of people have been affected by the economic downturn and sadly, this has led to the loss of many jobs – often those of the breadwinners in the household. This has resulted in homeowners not being able to afford the repayments on their homes, and ultimately losing them to the credit providers. Groundup recently brought to light the case of more than 225 applicants, mostly from Gauteng townships, who have launched a suit in the Constitutional Court, claiming damages from the big banks for home repossession abuse. The applicants are claiming R60bn from the banks for unlawful repossession of homes since the Constitution came into effect in 1994. This figure is based on the average estimated loss of home equity value multiplied by the roughly 100 000 homes repossessed in South Africa since 1994. Home equity is the difference between the market value of a property and the amount still owing on a mortgage loan. The Lungelo Lethu Human Rights Foundation is the driving force behind the suit, and has spent several years putting the case together in collaboration with advocate Douglas Shaw. All applicants had their homes repossessed after supposedly falling into arrears on their mortgage bonds. The homes were then sold at auction for a fraction of their market value through sheriffs’ offices around the country, according to the court papers. Shaw, who is representing the applicants, estimates homeowners have lost close to R60bn in foregone home equity as a result of the banks’ repossession practices. South Africa’s sale in execution practices are considered among the most abusive in the world, according to research by Shaw, since they allow for homes to be sold at auction with no reserve price. This has resulted in some homes being sold for as little as R10, and then on-sold by opportunistic buyers for hundreds of thousands of rand. In many cases, it 66
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