Amendment bills tabled to protect homeowners from repossessions

Two amendment bills, one to the Magistrate’s Court Act and another to the High Court Act, that will make it harder for banks to repossess the homes of defaulting clients, have been tabled in parliament by justice minister Yvonne Dausab.

The proposed bills tabled this week will allow home loan holders to sell their own homes instead of it being repossessed in the case of payment defaults.

The bills introduce safeguards to protect individuals who use their immovable property as their primary home from losing it through foreclosure due to financial difficulties.

These regulations include setting a reserve price for the sale of the property based on its market value and ensuring that the highest bid cannot fall below this threshold.

However, these changes do not solely focus on property sales but also provide alternatives.

In cases where selling the primary residence is not deemed appropriate, the court may consider various alternatives, such as attaching other property owned by the debtor or adjusting repayment terms.

According to the bills, banks may need to navigate additional legal procedures and requirements when seeking to sell immovable property through execution.

These procedures include the need for a court order authorising the sale and demonstrating that the sale is the most appropriate way to satisfy the judgement debt.

If the court determines that the sale of the primary home is not appropriate, it can consider alternative options.

Rule 108 of the High Court rules currently allows for judicial oversight in matters of bank repossessions.

In May, justice ministry executive director Gladice Pickering said special attention would be paid to cases where the property to be attached for repossession is the defaulting debtor’s primary residence.

“What it entails is basically that the court will take into account whether this property is the primary home of a person or the debtor.

“Also the court would have to be satisfied that less drastic measures were indeed explored before the sale of the property can be effected,” Pickering said.

Banks may become more cautious about lending to borrowers who use their primary homes as collateral, especially if they believe that the property might become difficult to sell in execution.

This cauld make it more challenging for banks to execute a sale in cases where the property is a primary home.

At the close of 2021, commercial banks held repossessed items valued at N$179 million, marking an 87% increase from N$95 million at the end of 2020.

In March 2020, the banks had repossessed cars, property and equipment valued at N$88 million, up from N$65 million at the start of that year. Pickering said in terms of the amendments, debtors should be afforded the opportunity to sell their properties first at the highest possible price in order not to lose everything.

“The sale of immovable property, especially if it is the primary home of the judgment debtor, must be the last option,” said Pickering.

Also in May, Bankers Association of Namibia chief executive Brian Katjaerua emphasised that banks are currently adhering to rule 108. He said each case is being handled individually, and underscored the significance of clients fulfilling their loan obligations to prevent banks from facing insolvency.

“If everyone owes the banks money and none of them pay, how will the banks survive?”