The Grahamstown High Court has restored ownership of a King William’s Town home to a retired teacher who lost it when she fell victim to a fraudulent reverse mortgage scheme.
Some years ago, Xoliswa Tshatshu, 65, and her former husband, Alfred, believed they were signing documents for a R100000 loan from Dream World Investments to make improvements to their Woodhouse Street home in King William’s Town.
Dream World’s agent, Asset Management Specialists (AMS), marketed these loan schemes mainly to people who had been blacklisted by the credit bureau but who owned property.
But the documents signed by the couple – instead of putting the house up as security for repayment of the loan – in reality authorised the transfer of their home to Dream World.
AMS acquired some 900 properties across the country in a similarly fraudulent manner.
To finance the “purchase”, Dream World acquired a loan from Standard Bank secured by a mortgage bond on the Tshatshu home. The scheme envisaged that the Tshatshu couple would pay “rent” on the property and Dream World would use this to pay their monthly bond instalments.
But, in 2007 the fraudulent pyramid finally toppled. AMS was in financial trouble and Dream World was unable to pay its many bonds.
In 2007 the AMS companies, including Dream World, were liquidated in the Pretoria High Court and the entire scheme was exposed as fraudulent.
But Tshatshu, with the help of the Legal Resources Centre in Grahamstown, took on Standard Bank and both liquidated companies.
She asked the Grahamstown High Court to declare the agreement concluded with Dream World invalid and to declare that their home once again belonged to them.
Standard Bank strenuously opposed the application, maintaining that the house should be sold off to realise the money Dream World still owed it.
They said the couple should have known what they were signing. The home was therefore legally sold to Dream World and the bank had a right to benefit from the security of the registration of a mortgage bond for the payment of the loan.
Judge Elna Revelas disagreed.
She said that the Tshatshu couple might have been negligent and naive but they were clearly hoodwinked. She said the bank had to some extent also contributed to the situation
“It granted a loan to a fraudster. It did not demonstrate what criteria was relied upon to determine Dream World’s creditworthiness.”
She said the bank should have been more diligent. Dream World had misrepresented its creditworthiness to the bank and as a result, the bank had loaned it money which – unbeknown to the bank – had facilitated a fraudulent scheme.
“Dream World never intended to repay the bank, but left it to two defrauded and indigent tenants to do so. That situation was indeed to the prejudice of the bank but was caused by Dream World and AMS ... It can be said with confidence in this regard, that it was not the who caused the bank’s mistaken belief and resultant loss.”
She declared all agreements signed with Dream World to be null and void and said the Tshatshus were the owners of their home.
A tearful Xoliswa, who heard the news of the judgment from the Dispatch, said she was over the moon.
“I can’t believe it. I have been living in terror of losing my house for years. I have suffered for all this time. Where would I go? My children. Where would they go? I thank God. I thank my congregation in Bhisho who prayed so endlessly for me. I thank my lawyers. They worked so hard for me to keep that house. Now it is ours again and tonight I can sleep.”
Teacher wins big fight against top bank, other firms
Some years ago, Xoliswa Tshatshu, 65, and her former husband, Alfred, believed they were signing documents for a R100000 loan from Dream World Investments to make improvements to their Woodhouse Street home in King William’s Town.
Dream World’s agent, Asset Management Specialists (AMS), marketed these loan schemes mainly to people who had been blacklisted by the credit bureau but who owned property.
But the documents signed by the couple – instead of putting the house up as security for repayment of the loan – in reality authorised the transfer of their home to Dream World.
AMS acquired some 900 properties across the country in a similarly fraudulent manner.
To finance the “purchase”, Dream World acquired a loan from Standard Bank secured by a mortgage bond on the Tshatshu home. The scheme envisaged that the Tshatshu couple would pay “rent” on the property and Dream World would use this to pay their monthly bond instalments.
But, in 2007 the fraudulent pyramid finally toppled. AMS was in financial trouble and Dream World was unable to pay its many bonds.
In 2007 the AMS companies, including Dream World, were liquidated in the Pretoria High Court and the entire scheme was exposed as fraudulent.
But Tshatshu, with the help of the Legal Resources Centre in Grahamstown, took on Standard Bank and both liquidated companies.
She asked the Grahamstown High Court to declare the agreement concluded with Dream World invalid and to declare that their home once again belonged to them.
Standard Bank strenuously opposed the application, maintaining that the house should be sold off to realise the money Dream World still owed it.
They said the couple should have known what they were signing. The home was therefore legally sold to Dream World and the bank had a right to benefit from the security of the registration of a mortgage bond for the payment of the loan.
Judge Elna Revelas disagreed.
She said that the Tshatshu couple might have been negligent and naive but they were clearly hoodwinked. She said the bank had to some extent also contributed to the situation
“It granted a loan to a fraudster. It did not demonstrate what criteria was relied upon to determine Dream World’s creditworthiness.”
She said the bank should have been more diligent. Dream World had misrepresented its creditworthiness to the bank and as a result, the bank had loaned it money which – unbeknown to the bank – had facilitated a fraudulent scheme.
“Dream World never intended to repay the bank, but left it to two defrauded and indigent tenants to do so. That situation was indeed to the prejudice of the bank but was caused by Dream World and AMS ... It can be said with confidence in this regard, that it was not the who caused the bank’s mistaken belief and resultant loss.”
She declared all agreements signed with Dream World to be null and void and said the Tshatshus were the owners of their home.
A tearful Xoliswa, who heard the news of the judgment from the Dispatch, said she was over the moon.
“I can’t believe it. I have been living in terror of losing my house for years. I have suffered for all this time. Where would I go? My children. Where would they go? I thank God. I thank my congregation in Bhisho who prayed so endlessly for me. I thank my lawyers. They worked so hard for me to keep that house. Now it is ours again and tonight I can sleep.”
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