Government has been advised to consider amending the necessary laws in order to protect defaulting homeowners from potential abuse by mortgage lenders.
Some homeowners also want the authorities to impose a moratorium and subsequent amendment of rules in the execution of judgement realm through statutory legislation as more people have been losing their primary homes at the hands of commercial banks.
The ministry of justice last week held consultations with the public about the sale of immovable property in the execution of judgements. Former magistrate Lea Shaanika, who spoke on behalf of the Black Leadership Network of Namibia, said there is a need for a moratorium and subsequent amendments of the rules as most of the laws are not in favour of the majority black people.
“We need to stop attacking the commercial banks. Although they are abusing and humiliating us the homeowners during the execution of judgement, we need to change our laws for them to speak to our situation,” she stated. Some homeowners claimed that homes are easily repossessed, although owners have a long history of honouring monthly repayments.
“Now, we have a lot of people who are going to lose their primary homes because of salary cuts due to Covid-19, and a loss of their jobs due to retrenchment and liquidation of their companies such as Air Namibia. Our government needs to change the laws.
That is the only way they will resolve the housing problem in the country,” said a speaker, who was not identified. Other participants suggested that other relief measures be extended to defaulting homeowners other than selling off the houses, including rescheduling the debt repayment period.
They also want lenders to consider introducing ‘payment holidays’ to enable debtors to find other sources of income for defined periods not exceeding 12 months. Although section 40 of the Banking Institutions Act 1998 prohibits banking institutions from carrying on the business of buying and selling immovable property, homeowners want the government to consider the possibility of amending the 1998 Act to remove this option altogether, or confining it to special cases, subject to the minimum reserve prices. Under sections 40 (3), (4) and (5), a banking institution can lend money to buy immovable property against the security of a mortgage bond. “If the borrower fails to repay the loan and the property is sold in execution, the banking institution itself can acquire the property and keep it for a maximum period of five years before reselling it,” the participants clarified. They claimed that it is under this specific section of the Act that banks tend to abuse homeowners. Justice minister Yvonne Dausab said a considerable number of homeowners have lost their primary homes, forcing the authorities to consider reviewing the applicable laws. “But the amendment of the rules was not enough. There was a need to amend the principal legislation to ensure there is a statutory process that sanctions the process that is envisaged under rule 108 of the High Court rules of 201,” she added. “It is for this reason that amendments to effect those changes and also bring the magistrate’s court provisions in line with the letter and spirit that provides scope for judicial oversight, were introduced.” Dausab said in light of the law reform process envisaged and the proposals under consideration, the ministry is attempting to ensure that there is a more participatory, flexible and mutually beneficial approach to execution proceedings. “The process currently favours the execution creditors, who are mainly the banks and its representatives, as they can afford the high legal costs associated with the proceedings. Particularly and in some instances, there are neither consequences nor accountability for those representatives that scrupulously exploit members of the public who are in the unfortunate position that they find themselves party to execution proceedings without representation,” she stated. “This is a predicament that we as a nation should address together in a law-making process that consults the people to enact laws made for the people by the people. The person most affected by the law is the ordinary Namibian citizen trying their best to make ends meet.” Recently, the Bankers Association of Namibia (BAN) said by the first six months of 2021, banks were compelled to foreclose on houses valued at N$230 million. This was as Covid-19 continued to threaten job security and severely impacted household income. However, the BAN emphasised that home foreclosure is the absolute last step, considering banks’ overall intent to keep owners in their houses rather than the opposite. “Sales in execution are often entwined in processes that can take up to five years and longer, which underpins the burden that banks carry as a consequence of the non-repayment of loans by clients when they encounter financial hardship,” the association explained earlier this year.
ljason@nepc.com.na