A Fin24 user has signed surety for someone for a home loan and has now discovered that the bank has automatically linked his profile to the outstanding loan amount. He writes:
A bank auctioned off a property belonging to someone for whom I have signed surety. That person has vanished never to be heard from again.
Can the bank - without any further communication, contract, agreement or discussion with me - legally automatically link a new account to my own banking profile for the difference they have calculated between the auction price of the property and the initial loan plus bank charges, interest and the bank’s own legal fees?
Such an account has now appeared on my banking profile with the description “home loan residual” or “home loan shortfall” - that is, it is not a mortgage loan per se.
If I have had no contact from the bank in over three years regarding this shortfall debt, and I have made no acknowledgement of or payments towards it, has this debt in fact prescribed?
If so, how do I go about getting it removed from my banking profile, preferably without using lawyers and incurring legal costs?
The debt balance appears to be in the region of R400 000.
Calvin Ndlovu, head of operations at FNB Home Loans, responds:
A surety is jointly and severally liable with the principal debtor for the performance of the obligations under the main loan agreement. This obligation to perform where the principal debtor fails to perform is contained in the provisions of the deed of suretyship which is signed by the surety.
A bank will first try and recover all monies due under the loan agreement from the principal debtor, which includes selling the property.
If there remains a shortfall, it will continue to pursue the principal debtor first, but where all attempts have failed or the principal debtor cannot be found and there is a surety, then the bank will exercise the right to enforce the performance of the obligation under the main loan agreement by the surety, which includes the repayment of the shortfall.
FNB’s policy is to report all shortfall accounts on the principal debtor's and not the surety's account. This account you now see on your profile was opened with the link being principal as opposed to surety.
* FNB offered to rectify what it suspects could be an incorrect loading of the account, but the Fin24 user has decided not to supply his details to the bank for further investigation.
Disclaimer: Fin24 cannot be held liable for any decisions made based on the advice given by debt experts. Under the ECT Act and to the fullest extent possible under the applicable law, Fin24 disclaims all responsibility or liability for any damages whatsoever resulting from the use of this site in any manner.