Rashida Ntotela – Cii News | 05 Safar 1437/18 November 2015

A mortgage is a haraam riba-based transaction that is based on a loan with interest in which the owner of the money takes as collateral the property for the purchase of which the borrower is taking out the loan, until the debt has been paid off along with the interest (riba).

As a Muslim who bows his head to his Creator it is a serious dilemma: How to obey Him completely in our financial dealings in a world that revolves around interest (Riba).

Usury poses a serious threat to our living and is a reality that most people encounter.

With the current economic crises, one can easily fall victim to not being able to manage a bond repayment that was probably well within your affordability when you initially purchased the property.

While banks often reject allegations that they care little for ordinary South Africans, it is evident that these institutions are presiding over a number of flagrantly repugnant practices, including houses being sold off at a fraction of their value – with the worst case being a house sold for just R10.00!

Johannesburg – FNB sells R 1, 4 million property for R 10 000

A property belonging to a now penniless Mike Rensveld was auctioned after a lengthy battle with the banks in order to reclaim his property.

Having raised R 73 000 to cover the shortfall, the bank rejected the amount, and in a space of 5 years the banks valuation for the property dropped from    R 1.4 million, to R 500 000 . Subsequent to that, his home was auctioned for a lousy R 10 000.

NewERA’s advocate, Douglas Shaw, with expertise in the application of the National Credit Act, Liquidation and Insolvency Act, Debt Counselling Law, and the Deeds Registries Act, spoke to CII Radio on some of the implications of people who have lost assets to banks in this way, our rights as consumers, and upcoming court cases that could bring relief to South Africans.

“Banks often auction properties at a low price. They do this to collect just enough to pay the bank back” said Shaw.

“It is quiet ridiculous, but unfortunately happens all the time in this country.”

The average of all cases that banks auction in a year is sold at a measly 90% and 95 % of the real price, he said.

In a comparative analysis to other countries , Shawn found that countries like Germany ,England and America have stringent regulations and systems in place in terms of safeguarding ordinary people from the ruthless acts i.e ‘repossessions’ and auctions of banks.

“They (banks) terrorise people for years afterwards to try and get them to pay the balance… and it wipes them off completely financially!”

Shaw also believes that it is unfair and unconstitutional for a bank to chase the client for any shortfall after they have sold the property for a low amount.

Banks need to be held accountable for the price gained on auction, continues argued, asserting that this kind of behaviour was not acceptable.

Without proper regulation, he said, banks had become a law unto their own.

Literally thousands of people, Shaw revealed, have been affected by such auctions in South Africa.

“Roughly Between 10 000 houses are auctioned a year, and 20 000 during the recession” Shaw said.

As if this is not colossal enough, underhand dealings take place at auctions and ordinary people are kept away by shady characters. This is morally obscene, Shawn asserted,  “people must be informed of their rights.”

That is how they are ripped off of their property. “Ordinary people somehow never see these bargains, property selling for 90% or less.”

Accordingly, “rules of court need to be changed to bring it in line with the kind of changes in other countries that have made their law consumer friendly.”

Despite the hardships and intolerance that may come with banks, they remain the power house for help if you are having problems with your bank. Nevertheless, we need to work with them, but put pressure to change the system Shaw aspirantly said.