Massive R60 billion Constitutional case launched against SA banks

 ·16 Aug 2017

Over 225 applicants, primarily from Gauteng’s poorer townships, have instituted a R60 billion claim for damages against some of South Africa’s biggest banks.

GroundUp reports that the case revolves around a number of unlawful repossessions by the banks over the past 23 years, with the R60 billion figure based on the average estimated loss of home equity value, multiplied by the roughly 100,000 homes repossessed since 1994.

Nedbank, Absa, FirstRand Bank and Standard Bank are cited as respondents in the case, as well as the National Credit Regulator, the Minister for Justice and Constitutional Development, the SA Human Rights Commission and the High Court Rules Board.

All applicants had their homes repossessed after reportedly 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.

The applicants’ advocate, Douglas Shaw, said South Africa’s sale in execution practices are considered among the most abusive in the world 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 rands.

In many cases, it is the banks themselves that are buying these houses at sheriffs’ auctions and then selling them for a profit, Shaw said.

The applicants claim that the banks are liable for damages for all properties sold in this manner since the interim Constitution came into effect in 1994.

They want the Constitutional Court to order the banks to repay the difference between the market and the auction price and to pay interest on the difference from the date of auction.

You can read the full story on GroundUp

Read: Should you fix your home loan interest rate in the current economic climate?

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