Repossessions could become harder for banks

Several proposals aiming to protect home loan holders from repossession by commercial banks are currently awaiting approval from the attorney general, Festus Mbandeka.

Once approved, the proposals will reach the parliament, justice ministry executive director Gladice Pickering has confirmed. These proposals are intended to amend the High Court Act and the Magistrates' Courts Act, ensuring that repossession orders are granted only after all necessary steps have been taken. Special attention will be given to cases involving the primary residences of defaulting debtors.

Currently, Rule 108 of the High Court rules allows for judicial oversight in bank repossession matters. This rule was affirmed by a judgment in the High Court in 2018 and the Supreme Court of Namibia in a case involving Standard Bank. The Ministry of Justice has incorporated Rule 108 into the High Court Act and the Magistrates' Courts Act, recognizing the need for judicial oversight to protect debtors.

The proposed amendments aim to provide what is known as "judicial oversight." This means that the court will consider factors such as whether the property being repossessed is the debtor's primary home and whether less drastic measures were explored before resorting to property sale. The proposals will undergo review by the Cabinet committee on legislation before reaching the National Assembly.

By the end of 2021, commercial banks held N$179 million worth of repossessed items, an 87% increase from N$95 million at the end of 2020. In response, the Ministry of Justice seeks to protect the rights of defaulters while allowing banks to recover their funds. Debtors will be given the opportunity to sell their properties first at the highest possible price to avoid losing everything. The sale of primary residences will be considered as a last option.

Meanwhile, the Bank of Namibia (BoN) has declined involvement in the matter, stating that they cannot interfere with the Ministry of Justice's process as a regulator and supervisory authority. Lawyer Richard Metcalfe criticized the BoN's stance and referred to the justice ministry as an administrative entity. The Bankers Association of Namibia (BAN) has taken a similar position as the BoN.

The Black Business Leadership Network of Namibia (BBLNN) president, Irene Simeon-Kurtz, refrained from commenting on Metcalfe's letter but previously praised the involvement of lawyers in addressing the home repossession issue, stating that normal rules cannot apply during an economic crisis.

In January of the previous year, the justice ministry proposed leniency in regulations, including a six-month payment holiday or loan period readjustment for individuals facing financial difficulties. The ministry aimed to propose legislative and administrative reforms regarding the sale of primary homes in execution of judgments.

Each case involving home loans in arrears is being handled individually by banks, as clients have distinct agreements with them when obtaining loans.