Sexwale 'will shame any reluctant lender'

Human Settlements Minister Tokyo Sexwale will name and shame banks that fail to come to the party in support of his R1 billion plan to guarantee loans for people who don't qualify for state housing but also can't obtain mortgage loans.

The department's acting director-general, Mziwonke Dlabantu, told MPs on Friday that Sexwale would meet with banks to discuss the scheme, aimed at addressing the so-called "gap" housing market.

Dlabantu and other senior department officials were briefing the National Assembly's human settlements committee on their strategic plan for the next five years.

President Jacob Zuma announced the loan guarantee plan during his State of the Nation address in February. He said the government had set up a R1bn fund to encourage banks to "accommodate people whose salaries are too high to get government subsidies, but who earn too little to qualify for a normal bank mortgage".

Sexwale would spell out the details of the plan and his interaction with banks during his budget vote next month, Dlabantu said.

He told MPs the Home Loan and Mortgage Disclosure Act provided for the naming and shaming of banks that refused to help people to secure loans for which they qualified.

"Remember, we are not asking banks to recklessly lend where they cannot recover their money. What is important is for banks to lend in a manner (where) they are comfortable with the risk (and) that we play our role in dealing with mitigating that risk to the best we can do," Dlabantu told MPs.

"The minister will deal with the rest in terms of engagements with the banks because he wants focused engagements with each of the chief executives about issues of their own lending.

"(The act) does provide name-and-shame provisions, with all the risks. If you are named and shamed as an institution... then you may lose customers. The minister is very cautious. He says 'let's first have that discussion with each bank, but if they persist, we will name them and shame them'," he told the committee.

Dlabantu told The Star after the committee meeting that there was a need for banks to come to the party, particularly as the government had provided R1bn to mitigate their risks of lending.

Sexwale would take reluctant banks to task.

"He is going to implement the provisions of the Home Loan and Mortgage Disclosure Act, which may indicate what banks are performing against the spirit of the act.

"That is after proper discussions and engagements with the banks. He will also acknowledge those banks that are performing very well, and through this discussion we want to look at what are the incentives and mechanisms to promote that," Dlabantu said.

"The R1bn fund that was announced by the president will then be discussed with the banks so that it is a fund that helps to mitigate and deal with the concerns of banks with regard to lending."

The Star

Posted at 10:27AM Mar 08, 2010 by Editor in Home Loans  |  Comments[4]