Up to a trillion rand could be refunded to South African customers by the banks. This is precisely the kind of cash injection that will help bring our country out of debt slavery and into a new age of prosperity.
Millions of South Africans who have loans or credit could see their monthly repayments reduced substantially. And tens of thousands of people who have had judgments against them over the past two decades may be eligible for compensation. Garnishee orders should be slashed and small businesses struggling with overdrafts should be released from the shackles of debt slavery.
In simple terms – it is very possible that your credit card, home loan, personal loan, vehicle loan or any form of credit you may have, has been settled in full by a third party, called a Special Purpose Vehicle (SPV). Because your loan has been settled in full (ie. the bank has been paid out for your loan), the bank cannot bring your case to court. Under these circumstances, the collections process undertaken by banks, and any judgments taken by the bank as a result, would be unlawful.
Once a loan has been securitised (this is the technical term for this process), the bank loses the legal right to the asset. Confirmation of this was given to the New Economic Rights Alliance in the form of the attached letter from the South African Reserve Bank (see page 5, para AD8).
Unfortunately the banks “neglect” to tell the customer that their loan has been settled thanks to securitisation. This is why The New Economic Rights Alliance, a non-profit organisation, was formed. We are here to educate the South African people, and take legal action if required.
An example of where a bank has admitted outright securitisation, and withdrawn their court case, is the case of ABSA vs Louis Louw. You can read about this case in our legal documents at www.thebigcase.co.za.
Several overseas court cases have also proven that what we are saying is correct. For example:
- A very recent case in Washington witnessed a huge victory that has opened the door for many future lawsuits of this nature (http://www.reuters.com/article/2012/09/14/us-foreclosures-courtcase-washington-idUSBRE88D1OF20120914).
- If that is not enough, an important case in Hawaii confirmed that a bank has no right to sue for an asset that has been securitised (http://stopforeclosurefraud.com/2012/03/31/usdc-judge-seabright-in-hawaiii-exemplars-securitization-fail-and-dismisses-a-foreclosure-for-lack-of-standing/).
- There was also a massive US$37 billion settlement paid out by five major banks in the US under similar circumstances: (http://www.cbsnews.com/8301-500395_162-57373706/5-banks-in-$26b-settlement-with-feds-over-abuses/).
- And hot off the press, the banks have just lost a huge case in Australia over securitisation (also called Collateralised Debt Obligations – CDO’s). This time, it was the investors who took down the banks for misleading them. This court case effects people all over the world (http://www.abc.net.au/news/2012-09-21/lehmann-brothers-test-case/4273896).
- Even the Federal Deposit Insurance Corporation is suing the major banks in the US for securities fraud. (http://jhaines6.wordpress.com/2012/09/16/bombshell-bombshell-bombshell-fdic-sues-the-big-banks-for-massive-securities-fraud/)
- There are many other cases too numerous to mention, but legal beavers who want to see for themselves should look up these cases:
- Wells Fargo Bank, N.A. v Farmer, 2008 NY
- Francis J. Bevilacqua, Third vs. Pablo Rodriguez, Oct. 18th, 2011
- FERREL L. AGARD Case No. 810-77338
Securitising loans behind the backs of the customer is a huge business for South African banks. According to the Banking Association of South Africa’s website, banks are securitising around R30billion per month (http://www.banking.org.za/Securitisation/detailed.php.) These numbers indicate that the banks are offloading private debt very quickly onto the public. This is leading to a kind of “financial cannibalism” where one person is forced to rely on another person’s repayments in order to survive.
If you default on a loan, the debt to the SPV and its investors are covered by an insurance policy. This is provided for in the Securities Services Act. Insurance of this nature (usually called a credit default swap) nearly sent insurance giant AIG under in 2008. When insurance pays out, the debt is settled. So, quite simply, there can be no legal case against you because all parties have been settled. In law, this would be referred to as de minimis non curat lex.
Securitisation has yielded massive profits for the banks while the customer continually loses out. Because they did not disclose what they were doing to the customer and did not inform the customer that their debt had been settled, we believe that the bank profited unfairly. Is it time to bring the scales of justice into balance?
Feel free to have your lawyer or debt counsellor contact us for more information. Alternatively, stand by while we prepare for a class action lawsuit whereby all South Africans can join with NewERA and claim from the banks what is rightly theirs.
Please let all your friends, family members and colleagues know about this letter, and to join us at www.newera.org.za.
THE NEW ECONOMIC RIGHTS ALLIANCE
PS. If you would like to demand answers from your bank right now, below is a list of questions that you can ask. If you are lucky enough to receive a response, read it carefully. You will notice that your questions will probably not be answered directly. Click here for a list of contact details.
- Am I indebted to the bank right now? (Please answer yes or no).
- Please confirm that the bank actually possessed the money they claim to have lent me, prior to my loan being granted. In other words, did the bank physically have the money they lent me, prior to the money appearing in my account?
- Would the bank be prepared to amend the credit agreement as follows: “We, the bank, did in fact possess the money we loaned you, prior to the loan being approved.”
- Was the loan funded by assets belonging to the bank at the time the loan was granted? Either way, please describe in detail the accounting process used to create my loan.
- Did the bank record my promissory note / negotiable instrument as an asset on its books? If yes, how was my instrument used to create my loan, and where is my valuable promissory note / negotiable instrument now?
- Does the bank participate in a securitisation scheme whereby debts / promissory notes are bundled and then sold-on to a third party/parties via special purpose vehicles, entities or alike processes?
- Was my loan securitised? If so, please send me all details regarding the securitisation.
- Does the bank have a legal right to collect money it claims I owe it? If so, then were does this legal right come from, assuming the loan has been securitised?
- Has my loan with the bank been settled by a special purpose vehicle, insurance policy, or by any other party?
- Regarding the security given to the bank by me, has this security been sold on or given as security to another party?