It took Patience Mavuso three years to get the sale of her property reversed, during which she had to fight off repeated eviction attempts. From Moneyweb.
FNB client Patience Mavuso had to fight off repeated attempts to evict her from her property despite catching up on her arrears and reinstating her bond as far back as 2016.
FNB claimed she fell into arrears on her mortgage loan and took judgment against her nearly 10 years ago. With that judgment in hand, the bank proceeded to sell the property at a sheriff’s auction in 2022, even though she had reinstated her mortgage bond six years earlier.
The new buyer picked up the property for a song and then started turning up at Mavuso’s door trying to evict her – in effect, an extrajudicial eviction attempt.
Mavuso informed both FNB and the buyer that she intended to bring an application before the court to suspend the transfer of her property on the grounds that she had caught up on her arrears and had reinstated her mortgage agreement.
Obstructionist
To bring the application, Mavuso needed the contact details for the auction buyer – which FNB and the buyer refused to provide.
To get around that, Mavuso had to approach the courts with two interim applications to court to get the buyers’ information and then join them to the proceedings.
Mavuso and the courts could have been spared two unnecessary applications had the bank or the buyer simply provided the requested contact information for the buyer.
The managing agents of the complex where Mavuso lives sided with the buyers and revoked her access to the complex.
This, says consumer advocate Leonard Benjamin, illustrates the difficulties faced by ordinary South Africans coming up against the banks in court.
Troubling implication?
The buyers claim that the sheriff did not inform them that Mavuso had brought an application to court to suspend the transfer of her property.
“If he did not, it would be a serious dereliction of his statutory duties, tantamount to fraud,” says Benjamin.
“And, if he told them that the transfer had been challenged but they still took transfer knowing that the transfer may be illegal, they would be implicated in 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 attorneys in this instance were Bezuidenhout Van Zyl Inc.
Confounding …
What we know from the case correspondence is that FNB indicated that it would oppose Mavuso’s application to suspend the transfer of her property, but failed to file an opposing affidavit.
Neither the sheriff who auctioned the property nor the auction buyers opposed Mavuso’s application to suspend the transfer of her property to the buyers, so she approached the court on an unopposed basis.
Just before the application was to be heard, FNB’s new attorney (it had dispensed with the services of Bezuidenhout Van Zyl) materialised at court and proposed a settlement.
Mavuso says she had no option but to agree to the settlement out of concern that the matter would be postponed if she did not, and would be subject to further attempts to evict her.
After almost three years, Mavuso secured an order instructing the Registrar of Deeds to cancel the title deed reflecting the buyers as owners, and to revive the one reflecting herself as the owner.
Ironically, FNB was on the receiving end of the landmark 2016 Nkata v FNB Constitutional Court judgment which dealt with precisely this type of situation.
The Nkata judgment makes it clear that any defaulting borrower who settles the arrears has automatically reinstated the mortgage agreement, provided they pay the ‘reasonable’ legal costs of the case. There is no need for a borrower to approach a court to affirm this right. It is automatic, so long as the arrears are settled, along with reasonable costs associated with enforcing the agreement.
Despite this ruling by the highest court in the country, banks are still trying to find ways around this inconvenience.
Benjamin says one of the ways banks do this is by loading unauthorised (“untaxed”) legal and other fees onto the customer’s home loan, thereby increasing the amount of indebtedness.
Even when customers catch up on the home loan arrears, the bank claims there is a shortfall because the legal fees have not been paid.
The problem here is these fees must be authorised by an independent taxing master. Banks still approach the courts looking for judgments against clients who have caught up on their arrears but have (correctly) not paid untaxed legal fees, says Benjamin.
Banks versus clients
Mavuso’s story bears remarkable similarities to that of Valerie Naidoo, who earlier this year stood alone before the Durban High Court against two senior counsel representing SA Home Loans after her home had been sold at auction for a tenth of its market value – despite the fact that she had caught up on her arrears.
Read: Widow faces eviction despite claim she settled bond arrears [Apr 2023]
Durban woman reclaims home after bank illegally sold it at auction [Aug 2024]
“In Patience’s case, it has taken three years to reverse the consequences of a sale that should not have taken place in the first place,” says Benjamin.
“In that time, the debt has escalated by the addition of three years’ worth of compound interest. In addition, Patience has three years less to pay off her bond. As a result, she will have to contend with a drastically increased repayment amount, which makes the possibility of a default in the future almost inevitable.
“One simply does not know how many other consumers have been deprived unlawfully of their properties on this basis.”
FNB responds …
Despite various opportunities to do so, FNB did not originally respond with comment prior to the publication of this article.
It has since sent the following statement:
FNB Response: Sizwekazi Mdingi, Head of PR and External Communications, FNB
FNB is committed to living up to its promise of help, and deeply apologises for its oversight and the anguish this situation has caused. A process is currently underway to rectify this and return all ownership rights back to Mrs Mavuso at the deeds’ office.
In this case, the client had defaulted on her mortgage credit agreement numerous times and on numerous occasions sales in execution of the property had been cancelled by the bank due to the client’s payment or the conclusions of payment arrangements with the client. This is always the bank’s primary aim, to assist defaulting clients and keep clients in their properties as far as possible. All communication shared with the client was centred on assisting her to settle the arrears on the mortgage account, and to conclude a new payment arrangement with the bank.
Default judgement was granted by the court against the client before the Nkata-judgment was handed down.
The bank regrets that due to manual processes at the time, the reinstatement of the mortgage credit agreement was not detected and therefore the execution processes continued.
As soon as the bank was made aware of this serious and regrettable error, the bank cooperated fully with the client and the court to remediate the situation. The bank didn’t oppose the client’s court application for reinstatement and fully agreed and supported the court order granted, which included the bank’s liability towards the sheriff, purchaser and the costs incurred by the client.
FNB has incorporated the principles articulated in the Nkata-judgment as handed down in April 2016 to run automatically in its operational processes.
The bank is meeting with Mrs Mavuso to resolve the matter and remains committed to assisting every client in their home ownership journey, while delivering true help and building long-term value for our clients.
