The Mortgage Indemnity Fund has admitted victimising a Sowetan community, reports Mungo Soggot
THE key government player in getting bank loans for the masses has admitted to a group of Soweto residents that it collaborated with three major banks to blacklist a relatively comfortable area in Soweto even though residents meet their bond payments.
Residents of Meadowlands have spent the past five years demanding that the banks – Amalgamated Banks of South Africa, Perm and Standard Bank – cut their mortages to compensate them for the poor quality of their houses. They only discovered this week that their area, Zone 9, had been officially redlined – subject to banks’ blanket refusal to grant mortgages to homeowners.
In a letter sent to the Gauteng government this week, residents’ representative Moses Majola said the Mortgage Indemnity Fund (MIF) explained the reasons for the redlining, saying it was a tactic to stop residents from complaining to the banks about their bonds.
The residents’ letter says: “The only reason that Meadowlands Zone 9 is redlined is that our group has been struggling for several years to get justice from the banks who financed poor quality housing.”
Residents say the MIF’s assistant risk cover manager Tlhoriso Thelejane told them “the community should put pressure on the bad apples” – those lodging complaints about the condition of their houses. He also reportedly told the residents that “we [the MIF] don’t check the validity” of the claims made by the banks. But the residents say in the letter that they have never met Thelejane nor any of his representatives, “so it is extraordinary that he would simply take the word of Standard Bank that we are `bad apples’.”
Thelejane told the Mail & Guardian that the words had been “taken out of context” in the residents’ letter. He said he had merely told Majola and his committee that the MIF’s “door is always open” if they had any complaints.
Majola says the residents never opted for a bond boycott, knowing it would undermine their case. MIF documents about the area say under boycotts: “None but in Zone 9, 97 houses affected.”
The MIF is a government-backed fund to facilitate bank-backed mass housing.
The lower middle class area that has been redlined has tarred roads and is situated near a clinic and a shopping centre. It is the only section of Meadlowlands to be redlined.
The houses, valued between R55 000 and R60 000, were built in 1989 by a contractor named Piet Smit. He was later found guilty of shoddy workmanship in the development, but has escaped liability by changing the name of his company five times. The plans – many of which do not exist or refer to the wrong houses – were “approved” by the Diepmeadow City Council, which has since become part of the Western Metropolitan Substructure.
During their battle with the residents, the banks have been represented by Ismail Ayob, President Nelson Mandela’s attorney. Ayob, who was unavailable for comment, acted for Majola during the 1976 Soweto riots.
A senior official from one of the banks, who has been intimately involved with the saga over the years, said the banks did not have a duty to ensure the quality of the houses. The official, who asked not to be named, confirmed the banks had offered to lend the residents more money to improve their houses. He said many of the faults in the houses were caused by poor maintenance.
Majola says that bank inspectors did come to look at their houses but did not get out of their cars.
Odette Geldenhuys, an attorney at the Legal Resources Centre which is representing the residents, says the banks should have a common law duty of care to monitor the quality of the houses for which they lend money. But she says this has yet to be tested by a South African court. “The banks are dealing with an ignorant consumer market. They should take some responsibility …”
Geldenhuys says she is negotiating with the council to pay the residents compensation. She expects the local council to make the payments. Of the MIF’s collaboration over the redlining, she says: “It is shocking and disgusting and probably unconstitutional.”
The residents’ letter to Premier Tokyo Sexwale, Finance MEC Jabu Moleketi and Housing MEC Dan Mofekeng says: “The MIF was established to facilitate the flow of financing to the townships. Instead, as you can see, the MIF is the kiss of death …”