Protecting Home Loan Seekers in South Africa: Combating Unlawful Mortgage Lending Practices by Financial Institutions

Abstract

All over the world, home loans and mortgages are part and parcel of the products and services being offered by the financial institutions-such as banks and homeowner mortgage institutions to their numerous customers. Prior, during and post home loan transactions, they owe their customers the duty to ensure full disclosure of all the terms and conditions in the mortgage agreements without withholding any information. This paper examines any act contrary to uberrimae fidei-utmost good faith in the transactions. Uberrimae fidei requires the highest standard of good faith on both the lender and borrower to disclose all material facts that could influence the decisions of the other party in seeking and granting home loans and mortgages. Failure might result in severe consequences by exploring both the civil and criminal responsibilities and liabilities of the party who acted mala fide-in bad faith. Against this backdrop, this paper examines the protection offered by the laws to ensure level playing field prior, during and after mortgage lending transactions.