Banks sued for R60bn over home repossessions

More than 225 applicants, mostly from Gauteng townships, have launched a suit in the Constitutional Court, claiming damages from the big banks for home repossession abuse. A GroundUp report says the applicants are claiming R60bn from the banks for unlawful repossession of homes since the Constitution came into effect in 1994. The report says 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. 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 South African Human Rights Commission and the High Court Rules Board. 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. Advocate Douglas 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. GroundUp says 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. Declan Rangasamy, head of Legal for Secured Lending at Nedbank, is quoted in the report as saying: ‘Nedbank will defend this matter if the application is filed at court.’ He said sales in execution were an ‘absolute last resort’ and were not in the interest of the client nor the bank. Marius Marais, CEO at FNB Home Loans, said FNB was aware of the allegations ‘and will address them formally once tabled before a court’.

Full GroundUp report