Ostrich farmer takes on Standard Bank over securitised loan

An Eastern Cape farmer and his legal team have deployed an unusual strategy to defend an action for repayment of a loan instituted by Standard Bank.

Davenport, the farmer in question, has placed a securitisation audit before the Grahamstown High Court which aims to prove that the loan has been sold to a Taiwanese Bank.

Securitisation refers to the process where assets (such as contractual debts or residential mortgages) are transformed or bundled into financial instruments through a process of financial engineering. These instruments are then sold to investors who expect returns from the recovery of the principal debt and interest.

It would seem that Davenport’s argument is that once the securitisation has taken place, the bank loses the right to enforce the loan. In other words, Standard Bank has no legal standing to bring the matter court. This argument is backed up by United States jurisprudence, but has yet to be argued in South African courts.  We watch with interest.

Full article available at: http://news.acts.co.za/blog/2015/06/ostrich-farmer-from-eastern-cape-shows-court-his-mortgage-loan-is-now-in-taiwan