AT the height of hyperinflation, many Zimbabwean businessmen invested in the leafy eastern and northern suburbs, where they woke up to birds chirping in their five-bedroomed mansions sitting on acres of green rolling lawns. However, the honeymoon is over, as banks and other financial institutions are forcing them into foreclosures.
By PAIDAMOYO MUZULU
Many of the properties are going under the hammer, as the owners fail to honour the exorbitant mortgages they contracted to live in affluence.
Reading through the newspapers, one is struck by the names of people whose houses have been repossessed or attached for failing to service debt. It looks like a who is who list in the Zimbabwean business and political circles.
Defunct Royal Bank director, Jeffrey Mzwimbi, former Renaissance chief executive, Patterson Timba, former Reserve Bank of Zimbabwe governor, Gideon Gono, Highdon Investments director, MacDonald Chapfika, MPs Dexter Nduna and Terence Mukupe and former deputy minister Bright Matonga have, at different times, been listed as debt defaulters.
RBZ senior staffer, Millicent Mombeshora, has also lost property for failing to service her debts.
Mukupe opened up on why so many properties are being attached and leaving the lives of the rich and famous changed, sometimes for the worse.
Mukupe’s four-bedroomed house in Glen Lorne, sitting on nearly two acres, will next month be auctioned after he failed to settle a debt with FBC Bank.
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Mukupe said the foreclosures are fuelled by mainly two issues, the contracting economy and usurious interest rates of between 15% and 20% levied by financial institutions.
“Interests rates charged are still very high. Many banks are stiff performing, as if we are in the Zimdollar era and charging rates of 15 to 20%, yet we are now dollarised. There is no way one can pay back at that rate,” he said.
Mukupe said banks were also recapitalising the loans as a way of circumventing the in duplum rule.
The in duplum rule is a common law rule that provides that arrear interest ceases to accrue once the sum of the unpaid (accrued) interest equals the amount of capital outstanding at the time.
“The banks are charging as much as 10% default rate penalty and more often than not interest would be equal to principal amount owed and because they want to circumvent the in duplum rule they recapitalise the loan further plunging one in debt,” he explained.
The former banker also said many mortgage books are toxic and should be written off the loan book, but most banks are afraid that this would expose that they are undercapitalised.
Mukupe, however, said he is lucky, as most people after foreclosure are thrown into poverty.
“They can auction that property, but I’m fine because I have other properties owned by trusts in my children’s names. Others are not so lucky,” he said.
Choruma Marais under instruction from the Sheriff of the High Court, will auction 37 properties on Friday at Raylton Sports Club in Harare.
Among the properties is Timba’s Borrowdale house.
“The defendant’s right and interest in certain undivided one half share in certain piece of land situate in the district of Salisbury called Lot 2 of Brooke Estate also known as No. 69 Hawkshed Road, Borrowdale, Harare measuring 1 648ha. Improvements: brick under tiles, assumed four bedrooms (main ensuite), lounge/dining, kitchen, bath, toilet, passage and cottage,” Choruma Marais said in their notice.
The 37 properties going under the hammer are a result of the following financial institution foreclosing on their customers: POSB, BancABC, Barclays Bank of Zimbabwe, CBZ Bank, AgriBank, Stanbic and Kingdom Bank Africa.
