No profit for banks from repossessed homes - SA

[dArKeR]

Cash-strapped homeowners whose properties are repossessed and sold by their banks are likely to get a better deal in future, thanks to recent interventions by the Ombudsman for Banking Services, Advocate Neville Melville.

Deeply concerned by the particulars of a complaint received by his office, Melville sought operational and legal clarity on what is rapidly becoming an everyday scenario.

A client defaults on his/her home loan. The property is meant to be sold in execution, but the bank does not get the reserve price at auction. The bank then buys the property at a cost of R100, for example, selling it at a later date for a much higher price.

If the bank does not get the reserve price at auction, does it credit its client's account with R100 and/or the valuation of the property? If the bank sells the property at a later stage, does the bank credit its client's account with the purchase price?

http://www.mg.co.za/Content/l3.asp?ao=30158