Households headed by children whose parents have died from HIV/Aids are an increasing problem for banks, which already face high levels of home loans defaults.
The traditional route of evicting those who fail to keep up with bond repayments becomes less palatable when the family concerned consists of children, who face further emotional trauma if thrown out of their homes.
An agency confronting this situation is Servcon – a joint venture between the Department of Housing and the Banking Council – which is responsible for resolving the situation for people who defaulted on their home loans before 1997. To do this it has to find a compromise between satisfying the business demands of banks and the social needs of society.
A closer look at the issues reveals a tangled web of interlinked problems. The houses in the Servcon portfolio range in value from R20 000 to R80 000, with the average around R40 000. The agency offers three options: rightsizing – moving to a Reconstruction and Development Programme (RDP) house; renting your own house for a lower amount than the repayments on the bond; and rescheduling the bond repayments, which almost certainly increases the overall repayment burden.
Rightsizing is the most frequent option, although this has perverse effects. There are cases of houses, bought with a bond, being sold for less than the cost of the government subsidy that will be used to build the defaulting owners a much smaller RDP house. The chances of this occurring are increased by the fact that banks have redlined many of the areas where bond defaulters live – so once the banks have evicted a non-payer, no potential owner can get a bond from them to buy the house. The result is cash is king – banks are willing to sell houses for greatly reduced sums just to get them off their hands. Repossessing a house can actually add to a bank’s liabilities – it has to pay for security to keep thieves and squatters out, and it also has to reimburse the municipality for outstanding rates and services.
But Servcon cannot help the estimated 20 000 people who defaulted on their bonds after 1997.
Servcon regards the housing problem as a ”swamp”, caused by a number of factors including lack of education and understanding, poor community leadership, unemployment, poverty, and, of course, HIV/Aids.
In a report, Servcon notes that ”it is an unfortunate fact” that no active plan of action has been developed to cope with the housing problem despite it engaging with government, the Banking Council and other stakeholders.
The organisation, therefore, is implementing a job creation and community development programme, with its pilot project at Vosloorus in Ekurhuleni.
Only two of the 300 people interested in computer training that is part of this programme had ever touched a computer before. Those two have now been trained by Wits Business School to teach others. In the kitchen women cook in two shifts. They start baking at 5am to sell their wares during the morning rush hour, then do another stint in the afternoon to catch the hometown rush hour.
In the former living room are 11 members of the Aids counselling and home-based care team, who have been trained by the Aids Consortium. Minnie Themba is the leader of the Aids group.
Themba knows of about 20 homes with Aids orphans. In one lives Lindi with her husband and her brother’s three children. Her brother died in 1999, his wife a few months later. Servcon says it is going to sell the house because the bond payments are in arrears; they will relocate the children to an RDP development outside Vosloorus.
Lindi says the oldest sibling – now 21 and trying to finish school – talks all the time about losing his family home. His younger sisters cry at the thought of having to leave the only home they’ve known. The size of the RDP house means that there will be no room for Lindi and her husband. They will have to move back to Daveyton; the children will have to fend for themselves. Servcon doesn’t pitch its clients into the streets, but the banks are not always that considerate.