BAN defends home repossessions

…affirms that banks exhaust all remediation avenues first

• By Hilary Mare

THE Bankers Association of Namibia (BAN) has said that property repossessions by banks are the absolute last step, considering banks’ overall intent to keep owners in their houses, rather than the opposite. 

In a statement, the association highlighted that 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 non-repayment of loans by clients, when they encounter financial hardship.

According to the Bank of Namibia, by mid-2021, banks were compelled to foreclose on houses to the value of N$230 million.

“In broad strokes, banks manage the debt relief process through the clients’ pro-active engagement and detailed discussions and negotiations with a workout strategy which will eventually result in the client servicing the loan either partially or over an extended term. Should the client continue to default after remediation agreements, including various options to restructure the loan, are reneged on again, the client’s account will be handed over to the attorneys, who will also go to considerable lengths to reach remedial agreement with the defaulting client. In the event that the client still does not adhere to any agreement, the attorneys will institute summons to proceed with a sale in execution,” the association said adding that defaulting clients have further recourse for dispute resolution at this stage, particularly since High Court Rule 108 came into effect, which stipulates that when a house is the primary residence of its owners, or people renting it from the owner as their primary residence, a court must consider measures that are less drastic than allowing the house to be sold because of the property owners’ debts.

The association further went on to state that collectively, these processes take several years to exhaust, during which time the banks, as the entrusted entity to manage their clients’ money prudently, carry the financial burden.

“Other regulations instituted by the Bank of Namibia, such as BID 2 and BID 6, serve to provide protection to individual and business borrowers when having to pay back funds borrowed, given the extensive procedures for dispute resolution and remediation, which must be followed before the bank can repossess a property,” further stated the association.

A the height of Covid-19 in the past two years members BAN responded with decisive measures that included a repayment holiday scheme, which saw banks approve the majority of the applications received for relief, thereby contributing just over N$11 billion to the economy through this measure; as well as specific products and measures targeted at the SME sector of the country to assist them through the pandemic.

A further N$2.3 million was donated towards the purchase of oxygen tanks and the construction of additional Covid-19 capacity at hospitals. This does not include other contributions the banks have made in their individual capacity.

BAN was established in 1997 as the representative trade association for the commercial banking sector in the country. BAN members are Bank BIC, Bank Windhoek, First National Bank of Namibia, Nedbank, Letshego Bank, Trustco Bank and Standard Bank.