Courts favour poor homeowners over banks

It is reported that the courts are now more inclined to interpret the provisions of the National Credit Act in favour of those whose homes the banks try to repossess, particularly if they are from disadvantaged backgrounds.

In four cases the homeowners were low-income earners and in most cases they had paid their bond payments regularly for 13 to 19 years. Equally important, their properties were now more valuable than the outstanding balances.

Judge Claasen commented that the arrears were of little significance to the banking institutions and the suffering of the homeowners if they had their homes taken from them would be far more serious than the temporary losses of the banks.

Although the thwarted banks could now institute actions for debt recovery in the Magistrates Court, the judge ruled that they first have to be served personally with a copy of his judgement and informed of their rights and benefits under the National Credit Act.

While no estate agent wants to see defaulting bond payers regularly let off the hook, the latest stance by Judge Claasen is to be welcomed.

Where bondholders have fulfilled their obligations over a long period and where their problems are probably caused by the recession, the banks have to be more reasonable than some now want to be. Let us not forget that worldwide it was reckless lending that was at least partially responsible for the global crisis.

Article by: Graham Leslie - www.realestateweb.co.za