We are almost dazed by a report about developer’s mortgage scam published in a local English daily very recently. A large number of apartment owners buying flats from housing companies and settling in with their families discover years later that banks have put their homes up for auction.
According to the report, this nightmare has become real for numerous apartment owners in Dhaka as some developers hoodwinked them into buying the flats keeping them in the dark that their projects were already mortgaged to banks. Some developers secretly mortgaged projects to banks before or during construction, took out huge loans, and never disclosed those mortgages to the gullible buyers. When the companies later defaulted, banks sued to recover the loans, courts ruled in favour of the lenders, and the properties were put up for auction leaving residents stunned to find their homes listed for sale.
These frauds are evident from the court data showing that from January to September this year, 1,076 writ petitions were filled with the High Court by the victims of such deceit seeking to halt such auctions. These cases involve nearly Taka 2,500 crore of buyers’ money and name more than 100 housing developers. The number of such cases has been rising sharply over the last four years. The Real Estate and Housing Association of Bangladesh (REHAB) has also received about 340 complaints of similar frauds by September this year, involving nearly TK 1,500 crore of customers’ money.
Victims are forced to turn to the courts to protect their homes and savings as the REHAB president Md. Wahiduzzaman said half of the accused developers are not members of the association, which can do nothing except suspending their membership as they have no legal authority to act against fraudsters. According to him, banks should be legally required to hang clear signboards on all mortgaged properties, displaying the plot numbers and mortgaged details. Ordinary buyers cannot check every bank to see if a property is mortgaged. Visible signboards must, therefore, be enforced by law to protect home buyers. Many advanced countries have centralised digital registries of mortgaged properties which system Bangladesh still lacks. Introducing such a system is essential to keep buyers aware of mortgage situation in order to protect them from such frauds.
According to experts, the housing sector is under the jurisdiction of the housing ministry, yet when citizens face such crises, there is no dedicated authority to help and fraudulent developers operate with impurity. It is alleged that collusion and nexus by some officials allows such companies to evade accountability. According to a high official of the housing ministry, complaints are investigated and the Real Estate Development and Management Act allows cancellation of company registration with imposition of fines.
Apartment buyers allege that some developers work hand-in-hand with a section of corrupt officials in sub-registrar offices to conceal mortgage deeds. The executive member of the Bangladesh Registration Service Association, however, said the blame cannot rest solely on sub-registrar office. Once a deed is executed, its information is recorded at several offices, including the AC Land office. Proper checks at all levels could prevent buyers from falling prey to such frauds. But the authorities concerned must take drastic measures against such fraudulent activities and punish the fraud developers hard to protect the buyers of houses or apartments.
