New rules for banks repossessing homes
Bank of Namibia steps in
Commercial banks, who have enjoyed unfettered power in home repossessions, could be in for a rude awakening.
If new regulations pushed by government go through, commercial banks seeking to repossess homes of their loan defaulters will be forced to sell these properties at actual market value, so as to lighten the debt burden on the owners.
Also to be mandatorily considered is home equity, which refers to how much of the value of a home an owner controls compared to that controlled by the lender of the mortgage loan.
This means any down payment made by the owner and any appreciation of the value of the home must be considered in order to bring down the value of the actual amount owed.
The Bank of Namibia (BoN) and the justice ministry are pulling out all the stops to halt the erratic manner in which commercial banks currently repossess homes of defaulting loan clients.
The new laws would also seek for transparency in the process of auctioning repossessed homes, amid widespread allegations that such processes are marred by collusion during the bidding processes.
Radical interventions
BoN is not seeking to stop repossessions, but wants to eliminate the unfettered power banks enjoy – and the total isolation of defaulters who lose their homes and are still obliged to continue servicing their bonds. Further defaults by clients prompt the banks to return and repossess further assets.
The reserve bank – which also assumes the duty of consumer protection in the absence of an independent body with such mandate - is working hand-in-glove with primarily the justice ministry to ensure its radical interventions tick all the legal boxes before taking on the might of the banks.
Delicate issue
BoN has conducted a study on how the current abusive behaviours of commercial banks can be curtailed by ensuring even courts consider the new rules before handing down default judgments.
During engagements with senior editors in Windhoek yesterday, BoN deputy governor Ebson Uanguta said: “We are seized with the issue of repossessions. It’s a delicate issue because the banks have been going all out to repossess homes and owners have very little protection when this happens”.
Saying the issue of repossessions are not entirely within the mandate of the central bank, he added: “Our laws must speak to the needs and realities of our people”.
Why undersell?
Another BoN deputy governor, Leonie Dunn, criticised the current trend of home repositions, saying the central bank has submitted its report to the justice ministry with a long-term view to address repossessions.
“Banks must make sure that the equity of the buyer is protected at all cost. The market in which these properties are auctioned is in a position to pay for the market value of the property, so why undersell it and keep the buyer in debt?” she asked.
Proposals for the new regulations will be revised and approved by Attorney-General Festus Mbandeka before being channelled to parliament.
The new regulations would form part of amendments to the High Court Act and the Magistrates’ Courts Act.
Also to be mandatorily considered is home equity, which refers to how much of the value of a home an owner controls compared to that controlled by the lender of the mortgage loan.
This means any down payment made by the owner and any appreciation of the value of the home must be considered in order to bring down the value of the actual amount owed.
The Bank of Namibia (BoN) and the justice ministry are pulling out all the stops to halt the erratic manner in which commercial banks currently repossess homes of defaulting loan clients.
The new laws would also seek for transparency in the process of auctioning repossessed homes, amid widespread allegations that such processes are marred by collusion during the bidding processes.
Radical interventions
BoN is not seeking to stop repossessions, but wants to eliminate the unfettered power banks enjoy – and the total isolation of defaulters who lose their homes and are still obliged to continue servicing their bonds. Further defaults by clients prompt the banks to return and repossess further assets.
The reserve bank – which also assumes the duty of consumer protection in the absence of an independent body with such mandate - is working hand-in-glove with primarily the justice ministry to ensure its radical interventions tick all the legal boxes before taking on the might of the banks.
Delicate issue
BoN has conducted a study on how the current abusive behaviours of commercial banks can be curtailed by ensuring even courts consider the new rules before handing down default judgments.
During engagements with senior editors in Windhoek yesterday, BoN deputy governor Ebson Uanguta said: “We are seized with the issue of repossessions. It’s a delicate issue because the banks have been going all out to repossess homes and owners have very little protection when this happens”.
Saying the issue of repossessions are not entirely within the mandate of the central bank, he added: “Our laws must speak to the needs and realities of our people”.
Why undersell?
Another BoN deputy governor, Leonie Dunn, criticised the current trend of home repositions, saying the central bank has submitted its report to the justice ministry with a long-term view to address repossessions.
“Banks must make sure that the equity of the buyer is protected at all cost. The market in which these properties are auctioned is in a position to pay for the market value of the property, so why undersell it and keep the buyer in debt?” she asked.
Proposals for the new regulations will be revised and approved by Attorney-General Festus Mbandeka before being channelled to parliament.
The new regulations would form part of amendments to the High Court Act and the Magistrates’ Courts Act.
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