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Saturday, November 24, 2012

Banks should do their part to help aggrieved buyers

It was reported in the news media last month that some house-buyers were conned into buying housing projects that do not exist. If it does not cause revulsion and anger, it must at least be shocking to know that individuals and groups were allowed to sell and build houses without the basic requirement of the law, that is, a developer licence from the Housing and Local Government Ministry.

A slew of professionals from bankers to architects and from lawyers to engineers and the related local councils allowed dozens of unlicensed developers to sell and build houses to the unwary public. At last count, there were 195 abandoned projects undertaken by such “developers” some of whom had built on land which had not been zoned for housing but was still “agriculture” status.

These startling facts were revealed at a high-powered meeting on abandoned housing projects chaired by the then Chief Secretary to the Government, Tan Sri Mohd Sidek Hassan in April this year.

What is more disgusting is that at every step of the way, such a serious breach of the law could have been prevented. Even before the first blade of grass was cut to make way for housing, the flaws were staring in the face of the approving or financing authorities.

Because of the shortcomings of most of them, thousands of innocent and unwary buyers have been left in the lurch. They not only parted with their hard-earned money as downpayment but are also compelled to service their loans for what would have been a roof over their heads.

Lawyers for the deceitful developers prepared those contracts that were not the mandatory sale and purchase agreements regulated by the housing legislation.

Today, they are left in the quandary. Some continue to pay for their rented premises and continue to make monthly payments for their loans with no sight of their dream homes. HBA has been inundated with calls from victims of those ill-fated projects and crying for the Government, Bank Negara and professional boards intervention.

This whole episode yet again reflects the manner in which the laws of the land are not respected and upheld.

Banks and financial institutions (FIs) are so eager for business that they are indifferent to legalities. Their sales and marketing team has a pre-imposed target to meet until loans are disbursed recklessly. The banks implicated should have, as a matter of course, troubled themselves to find out if their transactions are tainted or not.

Saying that only some banks and FIs are involved does not exculpate other member banks and FIs; it is in fact an admission of culpability. Affected banks and FIs should let the public and the affected buyers of unlicensed housing projects know what they propose to do in the dilemma.

Renouncing your security interests in such cases and withdrawing all impending court cases against them would be a good start.

The Association of Bank Malaysia (ABM) should get its members to cooperate with the purchasers to release their security interest on purchaser's property where the purchaser has paid in full. Truth is they don't care that the purchaser has paid if the developer has not with their arguments of “no legal obligations”.

It is surprising that the alarm bells were not triggered when those developers did not produce evidence of the vital Housing Development Project Account (HDA) as required under the law?

It is therefore astonishing to note that those member banks did not do any additional security checks other than to rely on the sales and purchase agreements. Even for projects that are not within the Housing Development Act, the developer must obtain the requisite approvals and licences before being allowed to commence work.

Thus, the banks must surely have their strict criteria to abide by unless the new breed of bankers are not in the know. The issue of breach of fiduciary duty of care (to customer) will surely arise.

Perhaps, the banks should observe a moratorium on interest and instalment owed by nave and innocent victims till the project is revived.

Banks should take a proactive role to make their utmost efforts to revive such projects. Attempts should be made to delist those purchasers/borrowers who are now blacklisted by the banks and may never qualify for another loan! Not even to buy a second hand motor car.

Perhaps, the affected member banks should exercise their corporate social responsibilities (CSR) in this instance far deserving than others. These affected buyers must be assisted in tangible deeds and not merely words.

Chang Kim Loong is the honorary secretary-general of The National House Buyers Association, a non-profit, non-governmental, non-political organisation manned by volunteers. For more information, click or e-mail

By The Star

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