Borrowers fight to keep homes

By TONY STICKLEY and PAUL YANDALL

Low-income families seeking loans are losing their homes to a finance company in a complex deal under which they sell their houses to it and then try to buy them back.

NZ Debt Repay is evicting people from homes they thought they owned for failing to repay money - in one case as little as $5000 - the company has loaned them.

The company is being taken to court by people who say it took advantage of them and the deal it struck with them was oppressive and harsh.

The families are suing the company and its directors, Kerry Richard Claydon of Mt Eden and John Joseph (JJ) Hughes of Ponsonby, as well as lawyer Dinesh Patel, who oversaw some of the transactions.

Mr Hughes says the company has at all times acted legally and he firmly rejects accusations that people have been duped into selling him their homes.

Many of the families involved are low-income and speak poor English.

One Samoan couple, Avatui and Tuikeke Ualolo, say they went to the company to borrow $10,000, but have now lost their Waitakere City home in a deal they claim they did not understand.

The deal involved selling their Glendene home (which had a 1997 valuation of $154,000) to NZ Debt Repay for $215,000 in February 1998.

They were to buy the house back for $225,000 in 12 months after paying a $65,000 deposit, which was non-refundable if the purchase did not proceed.

In the interim, the couple, who were initially paying weekly mortgage payments of $250, had to pay $460 a week as a "licence" to occupy their own home.

The deal went sour when the Ualolos fell behind in payments and then realised they were not paying off their debt but were in effect renting their own home.

In their statement of claim the Ualolos say that a contract they signed was "oppressive, harsh, unjustly burdensome, unconscionable or in contravention of reasonable standards of commercial practice."

They claim that Mr Patel, who they say was appointed as their lawyer at the insistence of the company, was negligent because he did not advise them that the contract was inadvisable and oppressive.

Samoan lawyer Olinda Woodroffe, who is representing the couple, said: "I just can't believe that anybody would do this, that anybody would be so cruel. It is despicable ... These people have been stung."

The couple want the High Court at Auckland to set aside the contract and return their house to them. The case is to be heard next month.

Auckland lawyers Greg Stringer and Brian Henry are also preparing to take the company to court for other families.

The lawyers last month won a High Court injunction preventing the eviction of the families pending the court hearing.

One woman facing eviction, solo mother Sophie Rountree, said she borrowed $5000 from the company in 1999 but then could not keep up payments because she became pregnant.

"They never told me that I was going to sell my house. They never said it wasn't under my name."

Theresa Lenie said her extended Samoan family faced eviction from their $169,000 Henderson home after falling behind in payments they thought they were making to pay off a $29,000 loan.

"They never told us we were signing over the house. Now we're so worried."

But Mr Hughes told the Herald that the company had acted legally and he rejected accusations that people had been duped into selling him their homes.

He said the court action that the company faced was being taken only because of a technicality involving disclosure.

"I'm fairly bitter about it but it's a business risk and that's the way it goes," he said.

"I won't have anyone telling me that I'm a fraud or that the thing has not been done properly because everything's been done [properly]."

He said he could not explain why people did not realise they were selling their properties when they signed a sale-and-purchase agreement. "I'm not in the business of collecting properties - that's not in my interest. I've always tried to help if people are having problems paying."

He said customers were advised to take legal advice and he recommended Mr Patel if people did not have their own lawyer because he was independent.

A companies office search revealed that NZ Debt Repay has 43 properties registered in its name, including two linked to Mr Patel.

Ministry of Consumer Affairs spokeswoman Judy Cochrane said that it was not unusual for homes to be listed as collateral in loan agreements, but NZ Debt Repay's arrangements sounded very extreme.

She said there was protection in the Credit Contracts Act from onerous contracts but people had to understand what they were signing as ignorance was little protection.