6 days ago
Financial Ombud gets bank to write off R233 000 home loan arrears after it sold home for R10 000
The National Financial Ombud Scheme South Africa intervened in a complaint after a bank sold a home for R10,000, leading to the cancellation of R233,000 in arrears.
Image: File picture.
The National Financial Ombud Scheme South Africa (NFO) has emphasised the need for fairness from financial institutions after intervening in a case where a bank sold a home for just R10,000 due to a client's home loan arrears.
The intervention of the NFO led to the bank writing off the client's home loan arrears of more than R233,000.
The details of the matter are contained in the NFO's recently released 2024 annual report.
Between 1 March 2024 and 31 December 2024, the NFO handled 35,855 complaints that was dealt with by its four divisions - Non-life and Life Insurance, Banking and Credit.
According to the report, in a complaint handled by the Ombud's banking division, a complainant held a Home Loan account with a bank and the account was in arrears.
The report explained that the bank exercised its rights in terms of the home loan agreement and proceeded with legal action to recover the full outstanding balance owing on the account.
"Judgment was granted and the property was declared executable. There was no reserve price set by the court for the sale of the property. The bank proceeded to sell the property on auction for R10,000 and the complainant remained liable for a shortfall of R233,241.90 after the proceeds of the sale had been credited to the account."
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When the NFO investigated the complaint, it was found that the property had been valued at R590,000. The outstanding balance on the home loan account at the time of the sale was R234,541.06.
In addition, outstanding rates and taxes on the property amounted to R335,575.12 at the time of the sale.
However, the NFO said it was of the view that despite these costs, there was still sufficient value in the property, and that a higher selling price could have been achieved by the bank to ensure that the full outstanding balance on the account was settled.
The report said: "Whilst the NFO remained cognisant that the court did not set a reserve price and therefore the bank was not in contravention of any court order, the office exercised our equity jurisdiction and remained firm in its view that it could never be considered fair nor reasonable of a bank to sell someone's home for R10,000 when it has a market value of R590,000.00."
The NFO therefore recommended that the bank write off the full shortfall amount.
"The bank accepted the recommendation, and the full shortfall of R233,241.90 was written off," the report said.
THE MERCURY
