Sim Tshabalala put to the test over ‘vindictive’ home foreclosure

The Kudoos family paid up their arrears to forestall eviction, so the bank cancelled the loan agreement.
Picture: Moneyweb

In a recent interview, Standard Bank joint-CEO Sim Tshabalala claimed the bank only sells debtors’ homes in execution “as a last resort”, and that it was eager to develop lifelong relationships with its clients.

This ought to be good news for those involved in legal action with the bank, but it certainly is not the experience of the Kudoos family of Glen Marais in Johannesburg, who took out a mortgage loan with the bank in 2001.

The Kudoos’s run a family business, supplying goods and services to government entities, which means that they sometimes experience delays in getting paid, and therefore occasionally fell into arrears on their mortgage payments. The bank tolerated this over the years because the Kudoos’s always settled the arrears when payments came in. 

In March 2017 the family again fell into arrears and notified the bank by e-mail that the bond payments would be late, but as they had done in the past, would catch up on the arrears once payments came in. This worked fine with the bank in the past, but this time the family received a registered letter advising it to pay up in ten days or face legal action.

The Kudoos’s hurriedly sent another email querying the registered letter, and this time received a response from the bank’s attorneys, repeating the threat to launch legal action unless the full arrears, now amounting to three months’ bond payments, were paid within ten days.

The family wrote back pleading with the attorneys to allow them an opportunity to catch up their arrears, as they had always done, by paying double instalments in the coming months. They received no reply from the attorneys, but in July were summonsed to appear in court. Realising they stood to lose their home, they consulted an attorney who advised paying their arrears before the home was transferred to a new owner. The attorney advised that rather than defend the matter, they should use their available funds to catch up on the arrears, which would automatically reinstate the mortgage bond. This is based on a Constitutional Court judgment in Nkata v FirstRand Bank where the court overturned the sale in execution of the plaintiff Nomsa Nkata’s home and instructed the bank to reinstate her mortgage bond after she had settled her arrears, in rather similar circumstances to that of the Kudoos family. This judgment in theory makes it more difficult for banks to foreclose of clients’ homes, and compels them to seek a more accommodative approach to clients in financial difficulty.

But when the family’s attorney perused the summons, he noticed that the bank had done something that – to his knowledge – had never been done before. The bank had cancelled the mortgage loan agreement, thereby making it impossible for the Kudoos’s to reinstate their mortgage bond, even if they did catch up on the arrears.

Financial and legal advisor Leonard Benjamin, believes the bank did this to circumvent the National Credit Act (NCA). “The NCA allows a bank customer to reinstate a mortgage bond once the arrears amount is settled. But Standard Bank’s decision to cancel the mortgage loan agreement makes it impossible to reinstate the bond. In my opinion, this has been done in extreme bad faith.”

What this means is that, for the Kudoos’s to save their home, it is no longer enough for them to pay the arrears. They will have to pay the full outstanding balance of about R900 000.

“Standard Bank gains nothing from the cancellation. Its rights would be no different if it had kept the agreement in force,” says Benjamin. “Whether it cancelled or kept the agreement in force, it would be entitled to exactly the same money amount and will be able sell the property in execution. However, for the debtors the implications of its decision to cancel the agreement are life-changing as they would be deprived of their right to reinstatement, which to all intents and purposes, will result in their home being sold in execution and their eventual eviction.”

Even if the bank were now to decide that it acted too hastily in cancelling the agreement and that it should allow the Kudoos’s an opportunity to catch up arrears, its decision is irreversible as the NCA prohibits the reinstatement of a credit agreement, even if both the bank and the debtor would like to do so.

“In the absence of a good explanation, Standard Bank’s actions are indefensible and simply vindictive and it is difficult not to conclude that the bank’s sole reason for the cancellation is to circumvent the Nkata judgment and thereby, to obstruct the consumers in the exercise of their rights and to sell the property at all costs,” says Benjamin.   

In the summons, Standard Bank seems to suggest that it cancelled the agreement because it had previously given the Kudoos’s an opportunity to reinstate the home loan, which they had done. The implication was that they had blown their one chance to reinstate the home loan and would not receive a second one.

The Kudoos’s are defending the action in the South Gauteng High Court, but Benjamin believes the matter may have to be challenged all the way to the Constitutional Court to stop banks attempting to circumvent the law. “If Standard Bank can get away with this behaviour, then consumer protection laws and the Constitution have no meaning.”

Several recent judgments make it more difficult for banks to foreclose on homes, packing muscle on Constitutional protections against arbitrary deprivation of property. Is this a new ruse to foil a system they see as increasingly stacked against them? Banks are guilty of some outrageous circumventions of the law, such as delivering summonses to the wrong address, and then turning up in court claiming the client has put up no defence. The recent R60 billion Constitutional Court case by more than 220 applicants against the major lending banks whose homes were repossessed and auctioned for a fraction of their worth is littered with such examples. Many of them end up homeless, or living in shanty towns with no hope of reintegration into the economy. Is that what the Constitution had in mind?

Sim Tshabalala seems sincere in his desire to build lifelong relationships with his clients, but he obviously has no idea what kind of behaviour goes on in his legal collections unit. If he wants to clean house, he should start looking at the win-at-all-costs behaviour of the attorneys he lets loose on clients. So, too, should the other lending banks. One legal expert contacted by Moneyweb with an inside track on the industry believes attorneys are hurting financially, which perhaps explains some of the irrational and aggressive, and sometimes unlawful, cases that are frequently paraded before the courts.

Standard Bank replies

When asked to comment on the reasons for cancelling the Kudoos’s loan agreement, rather than reinstate their bond, Standard Bank spokesperson Ross Linstrom replied as follows: “As per the Code of Banking Practice, Standard Bank  does not comment on the details of a particular customer’s situation with parties other than the customer or those mandated by law to act on behalf of the customer. We have and continue to act in a manner that treats customers fairly, with utmost dignity and within the parameters of the applicable legislation. We are committed to building and keeping relationships with customers as long as possible and we will only use legal action as a last resort. We also hold any partners to our business to the same principles and ethics.”



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In my experience Standard Bank Home Loans do not act in good faith, and even their “private” bankers cannot explain their behaviour. Far better to obtain a loan from another bank.

They are obviously unreliable debtors. If things were as simple as they claim an other bank would loan them the money but it looks that they have no hope getting a loan. It is hard for me to believe that a so called business owner who deals with the government is incapable to save up enough to cover a few months expenses in case problem with payments. Is the business one of those BEE type which can not compete with others and rely 100% on government support? Are they paying their workers the same way? What would happen if some other company would offer a bigger bribe and they loose their contract?
On a personal note about 20 years ago I helped a friend who got into financial trouble. I loaned him 10k for 3 months. It took 5 years to get it back, there was always some problem why he had no money, but somehow during that time he bought 2 new cars and took his wife to Europe twice. We are not friends anymore.

Had friends like that too. The school of life, only difference here is that the bank has bigger numbers out there and higher risk. With us it was our money.

I had friends like that, who put me over 500k in the hole, and when I had problems, they were nowhere to be found in their new cars and new flourishing businesses.

Nonetheless … They are no longer my friends, and never will be again.

Fool me once , shame on you … fool me twice …. Naaah … not this person!

Your sad story of lending money to a friend is irrelevant. You clearly have not done business with the government, otherwise you would understand how easy it is to be in the situation where you a make profit but have no cash. The government has put bigger businesses than this out on the street by starving them of cash. Also you make all kinds of assumptions about this family based on their surname, which leads one to make assumptions of one’s own (none good).

I am not making assumptions I am asking questions. I have dealt with government departments and SOEs, but they were not the main income source of my company. Actually one of the top 40 companies was the worst client, they placed a large order, and before delivery cancelled. When we told them that we had a binding contract they said to sue them, they have better lawyers than we. Luckily I have sold the company and retired a few years ago.

After all, the government (i.e. taxpayers) have to fund the Zupta empire. Somebody’s got to do it, nê?

In what part of his message does he mention their surname?

While there are probably a lot of facts to consider in individual cases, if Standard’s assertion is that the reposession process is executed in a way that 1) tries to keep the home owner in their home and 2) ensures a fair market-related recovery value and not unreasonable legal/recovery costs then they should publish stats on their activity for the past year or so that show sale value/estimated market value/municipal rated value and legal/recovery cost averages. Otherwise we are left guessing that the reposession process might be profit center for them and another example of a business that makes its real money in ways that are different from what one would think. Like fashion retailers ‘Club’ products, furniture retailers’ financial products and like the banks’ own bounced debit order fees which Moneywey has told us make up a significant portion of bank income in SA.

With the mortgage loan agreement one-sidedly cancelled by the bank prior to the summons’ court date, the bank by implication has effectively declared itself willing and able to write-off the outstanding loan amount as bad debt. They elected to no longer been bound by the terms, conditions and powers derived from the loan agreement such as the interest rate on the loan amount, term of repayment, etc. Though the bank will for sure try to sue for damages incurred, the home owner should resist any claim from the bank and instead offer a new payment settlement arrangement at a lower interest rate and on a repayment schedule that matches the ability of the home owner. Such arrangement that can be made an order of the court or a binding determination by the banking sector ombudsmen. I would suggest the home owner lodge his case with the ombud.

If nothing else, it would seem to me that this family received more than a fair share of ‘special treatment’. Most families are tossed out on the streets with their first three months default. No questions, no accomodation, no mercy…just out and foreclosed. So, it is ridiculous to argue that this family was not given more than enough ‘accomodation’. I would hold that their argument of not being accomodated will fall flat in court. No sensible magistrate would argue that not sufficient effort was made by the bank to do this.

This is a bank with the one of the highestbanking fees in world. It is also one ☝️ f the biggest in SA and they proudly state how much profit etc they have made … easy when you have a captive legislative market. Yet in their callousness they look at people as things to be used and abused. Just look at their public announcement, how much more disconnected can you get and show empathy and compassion on your client who has busted their gut to get up to date.
There can only be a few conclusions that we can draw from this … the bank is greedy … yes we know that … the highest fees in the world …. there is a bonus scheme or recognition scheme in place driving individuals in the department to act this way … or there is corruption in the department with outside parties …. odds are good on this one and everybody in the department is somehow involved .
This kind of behavior from somebody like the bank is just not acceptable !!

In an anecdote I would include the Attorney’s behaviour as despicable considering it is them that find these loopholes in the law. They are a law unto themselves.

The BIG problem that is faced by Lenders is that certain individuals abuse the system to cheat Lenders out of money they are owed.

Take for example the specific case of Nomsa Nkata. Nomsa Nkata is a serial fraudster who has cheated various companies out of Millions of Rands of money (MONEYWEB please do some investigation and dig up these judgments). This specific individual is so adept at abusing the legal system and hiding her assets from Lenders that she has managed to steal a small fortune without being held to account.
This is the problem with making legislation that is too lenient, you cannot then catch the real crooks.

A very appropriate case study showing why, as far as one possibly can, never borrow money from a financial institution. That contract includes that you give up your livelihood, respect and your soul.

Consider the position of the lender – who holds all the cards.

As a depositor, I am sick and tired of reading about borrowers who constantly default on their obligations and place my money (not the banks) at risk.

By their own admission this is not the first default and the bank is probably g@tvol. Good for them. Do try and introduce some sort of balance to these stories please

Sorry Reader 1. you have it wrong! If you place money in your bank,, you no longer ‘own’it. If, for whatever reason,the ‘fit hits the shan’ and your bank doesn’t want you to draw your investment they will probably lobby the Govt and Reserve bank who may come to their/your rescue or not! So you might not get ‘your’money back or get a part, but there is no guarantee. Google the number of banks that have closed and their ‘customers’ have not been fully reimbursed. Further,your money deposited with your bank is mostly used to fund other loans they make thus enabling your bank to create money and profit for themselves. ( Your pittance of a return from them is neither ‘real’ inflation beating or beneficial- so in fact you are losing buying power!
Fiat currency has no backing, merely a promise to pay!

Sorry again reader 1: and sorry Disruptive Innovator supporter, you are also wrong and right.

You are correct that money deposited into the bank is no longer yours it belongs to the bank.

Depositors money is not lent to Borrowers. The banking system we operate is call the “FRACTIONAL RESERVE” banking system. This system came into being in 1933. The banks lie to you when they say the lend depositors money to borrowers, this is not how the fractional reserve banking system works.

Essentially in 1933 first in America and now in all western countries the creation of money was removed from the Reserve banks and placed in the hands of the Commercial banks. The system is entirely Debt based in that no money is created unless a debt is created.

This is how it works and I will use fictional percentages and amounts. Lets say the fractional reserve is set at 10% (it differs from country to country). And lets say a bank has R1 million in reserve which represents 10%, that bank can now lend R9 million.This R9 million does not exist as a deposit, asset, or anything tangible its just a computer entry based on the reserve.

EG. you go to the bank to buy a house for R1 million, they check you out and approve your loan. When you sign the documents someone types into your account a balance of R1 million, this R1 million is not transferred from any account, its merely a computer entry which is done in terms of the Fractional Reserve system.

In a nutshell that R1 million that you supposedly borrow is created out of thin air, it does not exist until you create the debt of a home loan, its merely a computer entry.

The bank cancels agreement? This makes no sense.
With a mortgage bond loan the owner of the property is not the bank but the client.

A bond is registered against the property containing the lender’s conditions of loan. This bond is the bank,s security for the loan, stating the bank’s legal entitlement over the property in case of default.The bond is registered in the Deeds Office on the title deed of the property.

If the agreement was cancelled and the bond still registered no problem the loan can easily be reinstated.(Within an hour if needs be)

If the bond was cancelled, by way of removing the registered bond in the Deeds Office on the title deed, problems for the bank. The have just removed their legal right over the property.

What Sim Tshabalala says and does is two totally different things. I have experience of this. He is not true to his word. I hope that STANDARD BANK its staff and CEO can sleep at night. THANK YOU FOR NOTHING!!

End of comments.




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