Who owns your debt?

May 30, 2013Produced by Peter Moyo
In South Africa, hundreds of people have home and car loans. In most cases they would approach a bank to get a home loan or a car loan – but did you know that the banks might actually not own the home loan that you took? This is what those in the know in the financial sector call Securitisation. This is where a third party might own your bond as collateral against a loan given to a financial institution.
Securitisation is the process whereby cash flow producing assets (such as home loans, car loans etc) are pooled together and the value of such loans is packaged as securities which are then sold to institutional investors in the capital markets. Banks would sell these assets to Special Purpose Vehicles which in turn sell them on the Johannesburg Stock Exchange and bond markets.Recently some home owners have filed a class action suit against the Reserve Bank and four major banks. Most of these are people about to lose their houses and they are arguing that the bank has no legal right to repossess the house or car because legally that loan has been traded to a third party. They also argue that the bank has no right to administer the home or car loan or take payments, as the loan is no longer owned by them through securitisation.

If your debt has been securitised, your bank is not allowed to claim the money back from you

A book calledSecuritisation – A Conspiracy of Silenceexplains securitisation as a sinister process used by South African banks to swindle the people by secretly bundling and trading our loans on the stock exchanges and bond markets. Legal experts also say if your debt has been securitised, your bank is not allowed to claim the money back from you.Special Assignment follows the story of two men: Louis Louw has challenged his bank in court over the selling of his home loan. Marcus Roth had a rude awakening when a company he had never heard of since he took his home loan with a local bank, claimed ownership of his house. In the majority of cases investigated by Special Assignment, the big four banks have continued to pretend they own your bond and even repossessed thousands of homes under false pretence when they have long lost the legal rights to that loan.We investigate massive irregularities emanating from securitisation in the country.

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