Absa drags feet in securitisation suit
Absa has made conflicting claims as to why it is unable to produce a home loan credit agreement, first saying it was destroyed in a fire and later claiming it was sold to a third party, according to the New Economic Rights Alliance (NewEra).
These conflicting claims by the bank led to the postponement of foreclosure proceedings on Wednesday in the Western Cape High Court to enable Absa to produce the documents relating to the securitisation of the home loan of Melric Mc Epieuw and the disclosure of its buyer.
Absa wants to foreclose on Mc Epieuw’s house.
Banks securitise loans by bundling them together using a special purpose vehicle (SPV) and selling them to third party investors, who trade them on the capital markets.
According to the website of the Banking Association of SA, local banks securitise loans worth about R30 billion a month.
NewEra, which campaigns for transparency in banking, says banks are not upfront on this issue because once a bank securitises a loan, it loses all rights to the asset.
In the affidavit leading to the postponement, Robyn Zimmermann, a lawyer for Mc Epieuw, said she had asked Absa’s attorney, Frederik Loubser, on December 4 to produce the mortgage agreement signed by Mc Epieuw.
Loubser responded by saying that the home loan had been securitised.
Zimmermann told Loubser she wanted the details of the SPV to which the bond was sold as a matter of extreme urgency, as it was necessary to prepare for Mc Epieuw’s defence.
To date, Zimmermann said she had not received the requested documentation.
Also on December 4, she informed Loubser that the terms of the home loan referred to by Absa in the summons differed from those of Mc Epieuw and therefore sought a copy of the loan agreement.
Zimmermann added: “Our client disputes the fire which allegedly took place and requests the case number of the reported fire and the location which is referred to in your particulars. We place on record that our client has investigated the alleged fire and the fire marshal therein has confirmed that your clients removed the electronic back-up of their security documents prior to it being destroyed.
“He also confirmed that the security documents are kept in fire-proof cabinets.”