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Bond Granted Recklessly

The complainant and his father were granted a joint bond. Subsequently, the son lodged a complaint with the OBS alleging that the bank granted the bond recklessly as his father had numerous judgments listed with credit bureaux at the time of the application and did not consider his father's age of 52 years, when it granted the 20-year home loan.

When the complaint was lodged, the father had lost his job and could not solely afford the bond repayments. The bank repossessed the property and auctioned it for R475 000, holding the pair liable for the shortfall.
The bank confirmed that when the loan was granted, five judgments existed against the father, four issued four years previously and one three years previously. However, the bank countered that a full and proper assessment was completed according to the credit policy and procedures. There were no judgments issued in the 12 months before the loan was granted, and the parties were not in debt counselling, sequestrated, insolvent or under administration order. The bank further stated that their application passed the behavioural criteria and met the minimum score. Their net monthly disposable income was calculated to be R17 500, sufficient to cover the monthly instalments of a R700 000 mortgage.
The OBS, having referred to the NCA, advised the complainant that the process followed by the bank had been sound and that there could be no finding of reckless lending.

Lesson to be learnt:
An adverse credit listing does not necessarily preclude an individual from securing credit. The credit provider may not be blamed for reckless lending if all available information was considered to determine overindebtedness.

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