Deeds Office scam raises fears about home title security

FROM IOLProperty

Monday Jul 26, 2010

Deeds Office scam raises fears about home title security

Skulduggery in the Deeds Office that has seen more than 70 municipal and corporate properties fraudulently transferred to shady private companies since December last year raises the strong possibility of SA property owners now having to take out title deed insurance, as is the case in the US and other countries.

So says Berry Everitt, CEO of the Chas Everitt International property group, who notes: "Top officials who held positions of great trust at the Deeds Office have been implicated in the irregular transfers and fraudulent alteration of the title deeds registry, and the Hawks have been drawn into the investigation so there is a strong suspicion that there is a criminal syndicate involved.

"At the very least, this scandal has proved that the Deeds Office security procedures can be compromised - and that SA property owners may not in future be able to rely entirely on these for their security of tenure."

And that, he says, is a "very scary prospect", which immediately raises the question about the need for title insurance to be introduced in South Africa.

"This type of cover is a requirement in the US, for example, for almost anyone with a mortgage and the way it works is for the property owner or buyer to pay a once-off premium to a 'title company' that guarantees undisputed ownership of the property at the time of purchase, and will alert owners to any attempt to illegally transfer it to anyone else.

"Owners with this type of insurance can usually also expect compensation if there turns out to be some 'defect' in the title that could inhibit the use or resale of the property, such as a servitude over the property, or some previously undisclosed lien in favour of a third party like the municipality.

"And in most cases title insurance also gives the bank that provided the home loan to purchase the property peace of mind regarding the safety of the asset and title that secures the loan."

Title insurance, Everitt explains, is thus different from normal insurance in that it protects you against events that may have occurred before you took out the policy, not events that may occur in the future. "And given that, its cost is usually minimal when weighed against the protection it can provide."

Property prices rise despite rise in mortgage declines

From IOL Property Link : http://www.iolproperty.co.za/roller/news/entry/property_prices_rise_despite_rise

Friday Jul 16, 2010

Property prices rise despite rise in mortgage declines

The average house price rose 6.8 percent year-on-year in June to R837,599 from R784,427 a year earlier.

The growth in the average purchase price amongst first-time buyers remained strong, with year-on-year growth of 12.1 percent in June.

According to the mortgage company ooba, the average approved bond size increased 14.3 percent year-on-year in June to R695,381, compared with R608,316 a year earlier.

The average deposit as a percentage of purchase price fell 24.4 percent year-on-year to R142,218, equivalent to an average deposit of 17 percent of the purchase price.

The average ratio of bonds declined increased marginally in June, up 1.3 percent year-on-year to 48.8 percent from 47.5 percent a year earlier, due to the higher proportion of 100 percent loans in June. On a month-on-month basis the decline ratio fell 4.1 percent to 48.8 percent from 52.9 percent in May.

The ratio of applications declined by one lender, but approved by another, increased 7.5 percent year-on-year to 24.8 percent.

"This is good news for homebuyers, as it indicates a higher probability of loan approval from another bank even if initially declined," ooba spokesman Saul Geffen said.

General sentiment had no doubt been enhanced by the successful hosting of the World Cup.

"Overall, the signs remain positive for the housing market, although we expect price growth to continue at a slightly slower pace in the second half of the year."

Sapa

Banks wary of bonding self-employed people

Link: http://www.iolproperty.co.za/roller/news/entry/banks_wary_of_bonding_self
From IOL

Thursday Jul 22, 2010

Banks wary of bonding self-employed people

A growing number of people who are self employed, with incomes dependant on fluctuating commissions, face huge difficulties in becoming homeowners, says Lanice Steward, MD of the Cape Peninsula estate agency, Anne Porter Knight Frank.

This, she says, is because the banks, complying with the National Credit Act, have to be especially careful about lending money to people who are employed in positions which might be considered insecure.

"There is," said Steward, "a certain arbitrariness about the concept that a self-employed person, especially one on short term contracts, is not a good security risk because many of these people are high income earners - but that is the way the banks feel obliged to act."

If a self employed person does decide to apply for a bond he should, says Steward, "get all his ducks in a row".

This involves, firstly, producing all his annual financial statements for the last three years - and if he has not been in business for three years the chances of his getting a bond are likely to be greatly reduced.

Then, too, he will have to produce:
# his management (income and expenditure) accounts for the last three months;
# a cash flow summary for the last six months (if he is applying to ABSA for his loan);
# a copy of the lease on his business premises (if they are leased);
# six months bank statements;
# tax assessments for the last three years;
# a signed statement from an accountant confirming his income;
# a summary of his personal family expenditure in relation to his income; and
# his ID book.

Ironically, says Steward, right now in South Africa, more people are opting to be freelance entrepreneurs than ever before - some because they were made redundant by the recession or affirmative action policies, others because they see this as the way to achieve a better lifestyle - but it can take years before they own a home.

"No one wants to see South Africa becoming a nation of tenants rather than homeowners," says Steward.

In the circumstances, she adds, those considering buying a home should first talk to a reputable bond origination company such as ooba who can advise them at what level to pitch their bond application and how to eliminate potential obstacles (such as unpaid debts) which could mitigate against their getting a bond.

"The good news," says Steward, "is that month by month we are seeing the banks ease up on their loan criteria. So, with luck, by 2011 the position of the self employed wanting to become homeowners will no longer be so difficult and the current difficulties should not deter people from trying to buy while house prices are still at their low levels."

Posted at 12:27PM Jul 22, 2010 by Editor in Home Loans | Comments[0]