First National Bank (FNB) said on Tuesday that it has held discussions with the banking ombudsman, advocate Clive Pillay, and agreed that FNB’s criteria for reassessing home loans approved in principle more than a year ago are ”fair and equitable”.
FNB said it is aware that its original statement on its reassessment decision may not have been clear, and may have inadvertently caused unnecessary confusion and concern.
The applications being reassessed constitute approximately 0,5% of FNB’s home-loan customer base and is a small portion of the 20 000 new home-loan applications being processed every month, it said.
”FNB wishes to stress that the home-loan applications being reassessed are those that take up to a year or longer to register, are of a development-type nature (excluding building bonds), and are not those that normally take three to four months to transfer and register.
”The intention of this decision is to prevent customers from taking on more debt [than] they are unable to service, resulting in an over-indebtedness position. Since a home loan forms a substantial portion of any household budget, prudent assessment of the customers’ ability to service this debt is of paramount importance.
”FNB, through this action, wishes to prevent customers from possibly damaging their credit standing and/or losing their homes as a result of over-indebtedness, possibly leading to insolvency,” the bank stressed.
It said it will only reassess applications should the following criteria apply:
- where FNB guarantees have not already been issued;
- where any judgements or defaults evident with credit bureaus may have arisen between the original granting of the home loan and prior to registration of the property; or
- where there is confirmation by customers that they are unable to afford the home loan subsequent to the original approval.
”Each of these home loans will be reassessed on a one-on-one basis with the intention of granting final approval for as many of the affected customers as possible. The bank will only decline applicants in cases where the client will be severely over-indebted should the transaction go ahead.
”Customers that do not provide their updated financial information are required to confirm their intention to conclude the pending deal, failing which FNB Home Loans will contact each and every one of the identified customers with the intention to proceed with the home loan, unless the above-mentioned are applied.
”FNB is cognisant of the impact its decision may have on any one developer and their financial institutions, and will accordingly engage with them to find an amicable solution to mitigate any undue losses that may arise,” the bank said.
Absa said on Tuesday that it will only withdraw a home loan if instructed to do so by a client.
”We’d withdraw a bond if the customer instructs us to do so — and this must be done in writing,” said Gavin Opperman, managing executive for Absa Home Loans.
Opperman added that Absa believes strongly in its stringent underwriting.
”We make an assessment based on several factors including the type of residence — if it’s a holiday home or a buy-to-let property.”
Absa also takes into account the location of the property, the size of the loan requested and current economic conditions.
”Our actions not only protect the bank but the customer too,” said Opperman. — I-Net Bridge, Sapa