South Africans drowning in debt under lockdown hand over 500 cars and 89 homes back to banks

By Sihle Mlambo and Chulumanco Mahamba

Johannesburg – At least 500 vehicles and 89 homes have been turned over for auction since the beginning of July as many South Africans continue to drown in debt caused by the coronavirus.

The depth and scale of voluntary vehicle surrenders and owners trying to offload their homes as the cash crunch bites is potentially in the thousands.

Three major banks (FNB, Standard Bank and Nedbank) said they would only be able to reveal figures late this month as they were under a closed period. Only Absa could readily provide the horrific figures.

In terms of homes, the banks said customers cannot voluntarily auction them, but they do assist with marketing the sale of property for financially distressed customers.

The four banks said they collectively offered payment breaks to nearly 1.3 million customers, totalling about R100 billion in relief for desperate customers during the lockdown.

Absa’s managing executive for vehicle and asset finance, retail and business banking Faisal Mkhize said 382 cars had been voluntarily surrendered since the start of July.

He said 89 homeowners had applied for voluntary HUS (help you sell) proposition, where the bank assists in the marketing of the property for sale.

In the same period, Absa said it had repossessed 128 vehicles by court order.

Mkhize said it was too early to predict the full extent of Covid-19 devastation.

“It is too early for us to predict the full extent of the default rate due to uncertainty in the micro and macro environment. However, based on how severe and rapid the impact of the pandemic has been to consumers, we expect significant strain to manifest on the management of consumer credit obligations,” Mkhize said.

But political parties have criticised the government for failing to regulate and give a mandate to the banks about how to conduct themselves during the Covid-19 lockdown crisis which has led to an economic meltdown for many South Africans.

EFF spokesperson Delisile Ngwenya said the government had allowed banks to “operate with impunity during a pandemic”, leaving citizens vulnerable to greed.

DA spokesperson on finance Geordin Hill Lewis said people were feeling the consequences of the hard lockdown.

“It is the consequence of one of the world’s longest and hardest lockdowns which has had brutal consequences on the economy and which has destroyed the lives of many thousands of families who have lost jobs, income, businesses and now have to lose their cars and homes as well,” he said.

United Democratic Movement secretary general Bongani Msomi said: “That’s why even the taxi industry has been complaining. We believed that it was the government that was going to approach the financial institutions.”

The SA Federation of Trade Unions and Cosatu said the government should have monitored banks closely.

“It’s a hell of a crisis, the banks must play their part. We can’t just go into the usual where people are harassed by lawyers and who are also trying to force water out of a stone,” Saftu’s general- secretary Zwelinzima Vavi said.

Cosatu’s spokesperson Sizwe Pamla described the situation as a “national crisis”.

“The lockdown has destabilised the economy, inconvenienced many of these people who are losing properties and it was imposed by the government. We expected the government that imposed the lockdown to be hands on because it is unfair for the government to say we will invoke the Disaster Management Act but what happens to individual families and workers is between them and the banks,” he said.

At FNB, Tiffany Singh, the head of collections for home finance, admitted there was an increase in customers who were trying to sell their homes through their Quick Sell option.

She said FNB had supported more than 300 000 customers with about R5 billion in relief through payment breaks as of June 15. The bank also said it could assist qualifying individuals for up to six months.

Ross Linstrom, a spokesperson for Standard Bank, said the bank’s personal and business banking divisions had provided R92bn in relief measures to individuals, small, medium and micro enterprises and commercial clients.

Meanwhile, Filip Taylor Parkins, an auctioneer from Old Johannesburg Warehouse Auctioneers, said the industry had seen an upsurge of people wanting to sell and buy assets.

“During the hard lockdown in April and May, people told us that they’ve had a lot of time at home to sort out their garages to declutter and auction their items but the sadder part of the equation is that some people were forced to sell in order to make money,” he said.

He, however, added there were equal volumes of people buying and selling assets.

The Star

c7faa01a 6739 5ff4 94ba 6080673d5244 - South Africans drowning in debt under lockdown hand over 500 cars and 89 homes back to banks

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