The bank took the man to court and the court issued an order authorising the bank to sell his home on auction.
Homeowners struggling to keep up with bond payment will no longer face the indignity of losing their houses at an auction for small amounts which will extend their indebtedness to the bank. Picture: 123RF/ALEXANDER RATHS
The ombudsman found the auctioning of the property for R1,000 “was neither fair nor reasonable” and ordered the bank to relieve the man of half his debt, but left him to pay off the remaining R500,000. This rule was introduced to stop homes being auctioned for a pittance, only for them to be resold for huge profits, but as the ombud noted, it won’t necessarily result in you, as homeowner, being left with no debt.
The ombud didn’t think the property could be sold for more than R1m and didn’t think that even if there had been a reserve price on the property that the man would have been left debt free – only that he would have benefited from “a just and equitable process”. “The banks have collectively never been called to account for this, although the class action that has recently been launched is an attempt to obtain financial redress for wronged consumers,” he says.
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