Banks to face uphill battle to repossess homes

Yvonne Dausab

Minister of justice Yvonne Dausab is expected to operationalise a new law protecting homeowners against bank repossessions due to loan defaults.

On 21 December president Hage Geingob signed into law the Magistrates’ Courts Amendment Act of 2023 which protect homeowners.

While there is no exact date for when the law would become operational, justice executive director Gladys Pickering has confirmed the new amendments.

“The law was gazetted on 21 December 2023, but will come into operation on a date to be determined by the minister of justice. The commencement notice will also be gazetted,” she says.

Dausab last year submitted a discussion paper to the parliament asking for leniency in regulations so that borrowers do not lose their homes.

“We must make sure and must know that the rights of all interested parties must be protected and promoted, but the state has a duty to protect and promote the human rights of all citizens – especially the most vulnerable in our society, and an opportunity is presenting itself to rectify injustices,” she said at the time.

The old Magistrates’ Courts Act has been in place since 1944.

The new law imposes restrictions on the auctioning of immovable property, specifically targeting the homes of individuals facing loan defaults.

Lawyer Richard Metcalfe, a vocal advocate for legal protections for individuals facing the loss of their primary homes due to loan defaults, has expressed his strong support for these amendments.

Metcalfe says the alterations were a critical step forward in protecting the public’s interests.

“These long outstanding changes to the law are welcomed. It is in the best interest of all our people and halts the much-despised actions of cold-hearted corporate irresponsibility,” he says.

The amendment law broadens the definition of “primary home”, granting authority to the Rules Board for regulations related to property sales, expanding magistrate’ courts’ jurisdiction, imposing limitations on property execution sales, and addressing associated matters.

The act now defines “primary home” as main residence, regardless of occasional stays elsewhere or other property ownership.

Section 25 of the act is amended to regulate execution against a judgement of a debtor’s primary home, outlining conditions for sale based on market value and setting a reserve price.

The act further establishes rules for selling immovable property under court judgement, requiring court approval based on criteria like insufficient movable assets of the debtor or declaration of the property as executable.

Additionally, special considerations apply if the property is a primary home, allowing the court to explore alternative orders such as attaching other properties, adjusting repayment terms, or enabling voluntary property disposal.

The court’s jurisdiction covers various cases, including property claims of up to N$1 million in value, ejectment actions against occupants (up to N$1 million in value), determination of rights of way, claims related to liquid documents or mortgage bonds (of up to N$1 million), disputes from credit agreements (of up to N$1 million), and other claims under N$500 000.

The Bank of Namibia (BoN) last month said amendments could inadvertently result in discriminatory lending practices.

Lending discrimination occurs when credit decisions are influenced by factors other than the applicant’s creditworthiness.

BoN spokesperson Kazembire Zemburuka says to address concerns like discriminatory credit practices, the central bank plans a digital maturity assessment, leveraging technology to enhance efficiency and reduce subjectivity, while expressing support for the justice ministry’s proposed amendments and taking allegations of unfair practices seriously.

“Discriminatory credit practices form part of the areas that can be addressed leveraging technology and reducing subjectivity,” he says.

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