Banks aren't following procedure in selling the primary dwellings of people whose properties are in foreclosure. But changes to the rules could give some hope.
"My father came home with a letter from the bank that he has finished paying his house," recalls Ntombikayise Mthimkhulu*. "We were all jubilating that at least now we can ... start to renovate and extend the house."
The joy of finally owning a house was short lived. In 2009, the house was repossessed by the bank, and the Mthimkhulu family was subsequently evicted. They allegedly owed the bank just R17 000 but were never notified of the outstanding amount.
"Have you seen when the Red Ants evict people? That's exactly what happened," explains Mthimkhulu.
When the sheriff evicted the family, Mthimkhulu had just started a new job at the same bank that repossessed the house. Her parents, who worked as teachers, and most of her siblings were at school. Only one sister with her new born baby was at home.
"These people came and told her etswa, etswa, etswa [come out, come out, come out]. This is no longer your house." They did not giving her a chance to grab anything. The furniture was all scattered outside, like a jumble sale. "Neighbours came and inquired what happened, [but my sister didn't] know what was happening. She phoned my mom and dad," explains Mthimkhulu.
Some neighbours took some of the family's things to look after, but in the chaos "it was difficult to keep a record".
"Until that day," says an emotional Mthimkhulu, "we had never slept as a family in separate houses. But that day, we were scattered."
They had been rendered homeless.
Hundreds of people continue to have their homes auctioned from under them, despite the Constitutional Court having previously declared that banks should only sell houses in settling debt as a last resort, and that creative ways must be sought before selling people's properties.
Leonard Benjamin, senior legal consultant at Crush Bank Debt, echoed this sentiment, saying that banks "claim they only sell the homes of debtors as a last resort but, in truth, this is simply rhetoric ... In most cases, the only concession they are prepared to make is to give the consumer time to pay off their arrears. This 'concession' requires the consumer to pay off the arrears in installments, while at the same time maintaining regular installments. The burden of the payments proves to be insurmountable in many, many cases, and the consumer ends up losing their home."
Benjamin added that "there is so much more that [banks] could do to help consumers ... for instance, to extend the term of the loan, to freeze interest, to freeze the installments so that the arrears can be caught up, or to spread the arrears over the remaining term of the loan".
From homeowner to tenant
The transition from being a homeowner to renting property was daunting for the Mthimkhulus. "Imagine from homeowner [and] sleeping in your bed to sleeping on the floor of a rondavel [where] you are now paying rent," says Mthimkhulu.
The family was scattered for weeks before the parents could find a place that could accommodate everyone. But the condition of that rental house, according to Mthimkhulu, was appalling.
"We are all asthmatic. The carpets were filthy and had a bad smell. We tried to clean but you couldn't get the stink out of that house," explains Mthimkhulu. "The landlord knew that my father was desperate and knew we had nowhere to go. Rent beyikhuphuka nomakanjani. [increased anyhow.]"
No due process
Changes to the rules of court in 2017 to some extent have restricted the banks from selling people's houses, says Benjamin. Before the amendment, Rule 46 (12) of the High Court enabled creditors to attach and sell debtors' immovable property without a reserve price being set. "The court rules stopped properties from being sold at a pittance, sometimes for as low as R10. Subsequently, the courts have decided that all residential properties must be sold with a reserve price. It is hoped that this will result in a smaller shortfall between what is owed to the bank and the amount realised from the sale," explains Benjamin.
The Mthimkhulu family is still in the dark as to "how much [Nedbank] sold the house for".
Though the bank conceded it made an error, no due process was followed by the bank, alleges Mthimkhulu. "Everything happened so fast. I don't recall receiving notice of eviction. Even attaching other things so it will cover the R17 000 that they wanted, never happened. No phone call was made, no correspondence was sent regarding that R17 000, even my dad died without knowing that his house was sold for a stupid R17 000, because I found out by 2017 when I decided to fight for my family," remembers Mthimkhulu.
She adds, "Had I known my parents' house was going to be sold for a mere R17 000, I would have taken out a loan, if my dad could not afford paying a loan at that time."
Restore our dignity
In instances where the bank is at fault in selling someone's house, and the sale is irreversible, the only recourse available is to claim damages. Mthimkhulu wrote to Nedbank's ombudsman and also to the South African Human Rights Commission. Both dismissed her complaint as beyond their scope. The family eventually accepted a R250 000 settlement, which was way below property prices where they had lived.
In 2018, after nine years of renting, the Mthimkhulu family finally secured a house using the compensation from the bank. But, with only Ntombikayise Mthimkhulu working and her parents' pensions exhausted in legal fees, the family has struggled since the eviction and has suffered irreparable harm to their dignity.
"So le hona tje surname ya rona e chenchile, ha re sale bo [Mthimkhulu] re se rele bale 'ba ho jewa ntlo'. [Even now our surname has been changed. We are no longer the Mthimkhulus. We are those whose house was possessed.] That is how we have been described," she says.
"I want them to compensate in such a way that it is equivalent to the mess that they did. I mean we lost literally everything. Yes, now we have a house, but we do not have furniture, re ya qokelela [we are collecting] bits and pieces. It's a mess."
Benjamin emphasised the importance of ensuring that the bank has the correct contact details, like an email address. It is up to the homeowner to check these details. In cases where a letter is sent, a consumer is in a position to defend and engage the bank.
"Too many people simply give up without a fight when they get a summons, so it is important to impress on consumers that there is an opportunity to stop the sale and that all they have to do is to give the court an opportunity to exercise its discretion in their favour. It is important for consumers to engage with the banks when they run into problems. [Banks] are obliged to negotiate with you in good faith and to find ways to deal with your situation," says Benjamin.
*Not her real name.