Although FNB client Patience Mavuso settled her debts and reestablished her bond in 2016, she had to fight repeated attempts to evict her from her property.

FNB claimed that it had defaulted on its mortgage loan nearly 10 years ago and received a decision against it. With that judgment in hand, the bank proceeded to sell the property at a sheriff’s auction in 2022, even though it had reinstated the mortgage note six years ago.

The new buyer acquired the property for a song and then showed up at Mavuso’s door and tried to evict him; this was essentially an attempt at extrajudicial release.

Mavuso notified both FNB and the buyer that he intended to apply to the court to suspend the transfer of his property on the grounds that he had settled his debts and reinstated the mortgage agreement.

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blocker

To submit the application, Mavuso needed the auction buyer’s contact information, but FNB and the buyer refused to provide this information.

To overcome this situation, Mavuso had to file two interlocutory applications with the court to obtain the buyers’ information and then bring the buyers into the case.

Mavuso and the courts could have avoided two unnecessary recourses if the bank or buyer had provided the buyer with the requested contact information.

The managing agents of the complex where Mavuso lived sided with the buyers and revoked his access to the complex.

Consumer advocate Leonard Benjamin says this shows the difficulties ordinary South Africans face when facing banks in court.

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A problematic inference?

The buyers claim that the sheriff did not inform them that Mavuso had filed a motion with the court to stop the transfer of his property.

“If he had not done so, it would have been a serious dereliction of his legal duties and tantamount to fraud,” Benjamin says.

“And if he tells them the transfer is objected to but they still agree to the transfer knowing the transfer may be illegal, they will be in on the scheme.”

Moneyweb reached out to FNB for its side of the story but did not receive a response despite repeated follow-ups. FNB’s lawyers in this case were Bezuidenhout Van Zyl Inc.

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Confusing…

What we know from the case correspondence is that FNB stated that it would oppose Mavuso’s application to suspend the transfer of his property, but failed to make a statement opposing it.

Neither the sheriff who auctioned the property nor the auction’s buyers opposed Mavuso’s application to suspend the transfer of his property to the buyers, so Mavuso appealed to the court without encountering any objection.

Just before the application was heard, FNB’s new lawyer (who had dispensed with the services of Bezuidenhout Van Zyl) appeared in court and proposed a compromise.

Mavuso said he had no choice but to accept the agreement because he was concerned that if he did not accept the agreement, the matter would be postponed and he would be exposed to new attempts to evict him.

Almost three years later, Mavuso obtained an order directing the Registrar of Deeds to cancel deeds showing the buyers as owners and revive deeds reflecting him as the owner.

Ironically, FNB was on the receiving end of the 2016 turning point Nkata and FNB The decision of the Constitutional Court addressed exactly this kind of situation.

The Nkata decision makes clear that a defaulting borrower who settles the arrears automatically reinstates the mortgage contract, provided he pays the ‘reasonable’ legal costs of the case. The debtor does not need to apply to the court to confirm this right. This is automatic as long as the debts are paid, with reasonable costs associated with implementing the agreement.

Despite this decision of the highest court in the country, banks are still trying to find ways to overcome this problem.

One way banks do this, says Benjamin, is by charging unauthorized (“tax-free”) legal and other fees to a customer’s home loan, thus increasing the amount owed.

Even if customers clear their mortgage debt, the bank claims there is a deficiency due to non-payment of legal fees.

The catch is that these fees must be approved by an independent tax administrator. Benjamin says banks are still turning to the courts to obtain judgments against customers who are delinquent but have not (correctly) paid untaxed attorneys’ fees.

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Banks and customers

Mavuso’s story bears remarkable similarities to that of Valerie Naidoo, who stood alone against two senior lawyers representing SA Home Loans in front of the Durban High Court earlier this year after her home was sold at auction for a tenth of its market value. He had paid off his debts.

“In Patience’s case, it took three years to reverse the consequences of a sale that should not have happened in the first place,” says Benjamin.

“During that period, the debt increased exponentially with the addition of three years of compound interest. Patience also has three less years to post bail. As a result, it will have to deal with a significantly increased repayment amount, making the possibility of default in the future almost inevitable.

“No one knows how many other consumers have been unlawfully deprived of their property on this basis.”

This article is republished from Moneyweb. To read original here.