Banks silent on fate of clients’ home loans – IRR

Institute says this raises particular concerns about fate of households liable for repayments

Banks silent on fate of clients’ home loans – IRR

19 April 2021

The Banking Association of South Africa (BASA) has turned down an invitation from the Institute of Race Relations (IRR) to put forward its views on the implications of the Expropriation Bill for its clients – specifically, what it envisages happening to outstanding home loans on expropriated properties.

In its latest communication, BASA declined the invitation, stating that ‘until the Expropriation Bill is adopted and there is some legislative certainty, we will not comment further’.

Under the terms of the Expropriation Bill, and in view of much of the rhetoric emanating from the political leadership, there exists a very real threat that expropriation could become a widely used mode of acquiring property for the state.

This raises particular concerns about the fate of households liable for repayments on their home loans. Having lost their property, will they be expected to continue servicing the debt?

The Expropriation Bill indicates that mortgages will be terminated in the event of expropriation. It remains unclear what will become of the actual debt.

BASA representatives have previously indicated that when this occurs, the government should guarantee the repayment. Since this is unlikely to be met from a strained fiscus, is the implication that the client will remain liable?

These are among the questions we had hoped to discuss publicly with BASA, at a livestream event on Thursday 22 April.

It must also be noted that South Africa’s banks, by virtue of their membership of the Agricultural Business Chamber (Agbiz), have in the past endorsed EWC and the intrusions on property rights proposed by the Presidential Advisory Panel on Land Reform and Agriculture when the Agbiz ‘representative’ signed the Panel’s report. To date, we are not aware of any bank having taken issue with this.

The IRR believes that it is inadequate for the country’s banking institutions to dodge these questions, or to defer them until ‘certainty’ is achieved. The country’s banks have accepted the stewardship of their clients’ money and assets, and have profited by so doing.

Good corporate governance and simple ethics demand at a minimum that they be prepared to express themselves on an issue that is of existential importance to their clients and society at large.

The IRR has argued that the mounting threats against and burdens imposed on South Africans – of which the drive for expropriation without compensation is an egregious example – amount to citizen abuse. Countering such abuse is the focus of the institute’s #StopCitizenAbuse campaign.

With or without BASA’s participation, Thursday’s livestream event will go ahead, with IRR analysts discussing expropriation policy. The event will be held at 7pm. To access it, use this link: https://streamyard.com/twrkdavbhz 

Issued by Michael Morris, IRR, 19 April 2021