A couple turned to court to get back their home which they lost in a fraudulent financial scheme.
They were under the impression that they were applying for a loan to do refurbishments to their house – meanwhile they unwittingly signed a document for their home to be sold for far less than what it was worth.
Benita and Claude Anderson turned to the Eastern Cape High Court in Gqebera as they said they had no idea at the time that they had fallen prey to a fraudulent scheme. Their home in the city has, meanwhile, been sold to new owners.
At the centre of this dispute is a fraudulent reverse-mortgage scheme devised and implemented by the now deregistered company, Asset Management Specialists, to which approximately 150 financially distressed individuals fell victim.
This resulted in the loss of their homes; the very thing that they sought to protect when approaching Asset Management Specialists for financial assistance.
Judge Ivana Bands commented that, unsurprisingly, this was not the first time that the Asset Management Specialists scheme had come under fire, having previously received judicial attention in numerous matters.
The application is opposed by the current registered owners of the property. Primarily, they argued that the Andersons had the intention to dispose of the immovable property and, accordingly, they were not defrauded.
Alternatively, they contend that in the event of a finding that they were the victims of fraud, their claim for return of the property had prescribed.
In short, Asset Management Specialists approached the general public by way of advertising, offering distressed property owners what they believed to be a solution to their cash-flow problems. This “solution” took the form of what Asset Management Specialists referred to as their “product”, which provided would-be clients seeking to raise finance, but unable to do so due to having been blacklisted with the credit bureau.
An answer to their quandary was obtaining a loan on their behalf at a preferential interest rate, through an Asset Management Specialists shelf company.
A mortgage bond would be registered over the immovable property to serve as security for the loan. To participate in the scheme and qualify for the Asset Management Specialists “product”, the client had to be the owner of an immovable property with sufficient equity.
The client’s immovable property would be sold and transferred to an Asset Management Specialists shelf company, specifically incorporated for this purpose. The client was at all times led to believe that the immovable property would simply be transferred to the shelf company, in which it would “rest” on behalf of the client.
Asset Management Specialists raised the finance by utilising creditworthy individuals, with proven income and clean credit records, as guarantors to provide security in the form of suretyships in favour of the relevant banking institution on behalf of the shelf companies.
The guarantor, in return for participating in the scheme, would receive a fee equal to 5% of the amount raised by the mortgage bond. This was but one of many costs for which the client would become liable, under the scheme.
The client would be required to enter into a written agreement of lease with the shelf company in respect of the property. In terms thereof, the client would be liable for the payment of monthly rental at a rate equal to the bond repayments for which the shelf company was liable to the bank, which was much higher than the client’s initial bond repayment prior to becoming embroiled in the scheme.
Following their engagement with Asset Management Specialists, and in order to finance a loan of R100 000, the Andersons applicants had not only alienated their property, valued at R785 000 for an effective price of R231 548.01 (R131 548.01 to settle their existing home loan and R100 000 being the funds “advanced” to them).
They also became liable for the payment of monthly rental to reside in the property equal to the repayments due in terms of a significantly higher home loan, in the amount of R785 000.
The Andersons, who wanted to do renovations but could not afford it, met with an Asset Management Specialists representative and signed the documentation presented to them, which they understood to serve as confirmation of the loan (for which the immovable property would serve as security).
They made it clear they never intended selling their home.
The Andersons only much later discovered they were the victims of fraud. By then their home was sold from under their noses.
All attempts to contact the Asset Management Specialists head office proved fruitless. The couple later read about the fraudulent scheme in the newspapers.
In coming to their aide, Judge Bands said: “It is inconceivable that any homeowner would sell their immovable property worth R785 000.00 for an amount of R231,548.0… and then utilise the monies left over…. to renovate a property which they no longer owned but instead occupied as a tenant, all the while paying rental equal to the monthly home loan instalment, which was far in excess of what they were originally paying (as owner).“
In setting aside the deed of sale, the judge said the new owners had the legal remedy to institute a claim for damages against whoever they deem responsible for their loss.
Pretoria News