By KHRISNA VIRGIL
Tribune Staff Reporter
kvirgil@tribunemedia.net
DESPITE the failure of the government’s mortgage relief plan early in this political term, Prime Minister Perry Christie yesterday announced plans to revive the scheme, revealing that it will cost taxpayers $20m over four years.
This initiative was one of the Christie administration’s underperforming programmes and led the Prime Minister to admit in 2013 that only four or five homeowners were expected to receive assistance through the initial plan.
However, three years later, during his last budget communication before the next general election, Mr Christie said his administration has designed a “comprehensive” mortgage relief programme in collaboration with the Clearing Banks Association to assist borrowers negatively impacted by the financial crisis.
The revamped programme will provide financial incentives that will allow banks to offer borrowers who have some ability to pay, but have fallen behind, the chance to get back on track, Mr Christie said.
“Subject to programme eligibility criteria, banks will offer qualifying borrowers a minimum 20 per cent to 25 per cent reduction in monthly payments,” the Prime Minister said during his 2016/2017 Budget Communication.
“For their part, borrowers will be required to attend a financial counselling programme that will be established and run by the government.
“According to initial estimates, upwards of 1,000 delinquent borrowers, which are persons who are 90 days or more in arrears as of May 1, 2016, are anticipated to qualify initially for the mortgage relief programme. That number could of course go higher.
“The programme has been designed to make it as attractive as possible for eligible borrowers to agree to participate - eg, through large reductions in monthly payments, the ability to immediately start paying lower amounts prior to loan modification paperwork, etc,” he said.
“As well, the programme has been designed on the basis of the most current information from the banks’ own portfolios, thereby maximising the chances that programme participation will materialise. The total cost is estimated to be in the range of $20 million over four years and will be paid by the government.”
Mr Christie said he is fully cognisant that this programme, although well structured, does not address the root cause of the mortgage crisis in the Bahamas, nor does it provide a guarantee that persons who may fall into financial difficulty are afforded a duty of care by their lender with respect to their home.
In this regard, he said the government is also discussing with the Clearing Banks Association guidelines on how to treat delinquent mortgagors.
“We want to ensure that a Bahamian who is delinquent is afforded opportunities to retain his or her home or, if all else fails, gives up that home in a dignified manner. To achieve this objective of which I have spoken - to keep Bahamians in their homes - a revised Home Owners Protection Bill will be presented to this House for passage before the end of this calendar year. We are in the process of settling this.”
He said additional details on the mortgage relief programme would be provided during the budget debate, which will begin next month.
When the PLP’s mortgage relief plan was officially introduced in September, 2012, there were an estimated 4,000 homeowners in mortgage payment arrears. That year, State Finance Minister Michael Halkitis said that around 1,000 would likely qualify for assistance under the plan.
As a result, the government later announced that $10 million would be allocated to the plan, which was a major 2012 election campaign promise and listed in the PLP’s Charter for Governance.
Comments
cmiller 7 years, 10 months ago
Jesus, not again. Empty, transparent election promises. Our politicians have no shame embedded in their DNA. Hope this is not VAT money.
cmiller 7 years, 10 months ago
I am getting there.
Sickened 7 years, 10 months ago
Why not get the Central Bank to just lower the random prime rate that they have set, then everyone's mortgage payments will go down? Those lenders struggling to make ends meet will be helped and those who can better afford to pay their mortgage will have additional savings that they may hopefully spend locally and thus boost the economy.
DDK 7 years, 10 months ago
“The programme has been designed to make it as attractive as possible for eligible borrowers to agree to participate - eg, through large reductions in monthly payments, the ability to immediately start paying lower amounts prior to loan modification paperwork, etc,” he said.
Does this mean that principal or interest will be magically reduced or will the poor struggling homeowner end up paying five times the original amount borrowed instead of the usual two to three? Let's not forget the V.A.T. levied on ALL bank transactions.
DDK 7 years, 10 months ago
If the P.M. is suggesting the Government will pick up the slack, that will never happen! The Treasury does not like to write cheques (at least not for debts owed lol!).
sheeprunner12 7 years, 10 months ago
Beware of the PLP voodoo economics this year
realfreethinker 7 years, 10 months ago
The only winners here are the banks. All they are doing is extending your payment plan and increasing the amount of iterest they collect. There is no where in this plan to reduce your liability. Another problem is,no matter how low the payments are,if you aint gat no job ya still can't pay
sheeprunner12 7 years, 10 months ago
Amen ........ Why cannot that brilliant mind of John Rolle at the Central Bank reduce the fixed prime rate from 4% to at least 2% to help Bahamians??? ... this man cannot claim that he has not had the international experience and exposure to how a simple adjustment of the prime rate will ease the pain of thousands of Bahamian borrowers ...... then enforce a serious savings plan for all borrowers
TalRussell 7 years, 10 months ago
Comrade PM I wouldn't be referencing a "2013" mortgage relief program that only four or five homeowners are "still expected" to receive financial relief.
viewersmatters 7 years, 10 months ago
what type homes does the 1000 qualify delinquent homeowners have...wow....but hey its fascinating that our government has an mortgage plan to assist delinquent home owners betters new its costing the taxpayers 20m.........wtf.......
bogart 7 years, 10 months ago
First of all a proper diagnosis should be done as to why the problem of some 4,500 defaults affecting these mortgagors and FAMILIES, parents, children, elderly in these homes and tying up 800-900 million. Many banks operating from headoffices overseas and monitored daily through computer pipeline also mandated that local officers have tremendous loans to give out targets for officers to get bonuses etc. many loans were given out utilizing mortgage Indemnities insurances allowing the customer to increase risk, many loans were close to their TDSR (total debt service ratios) of 45% of income repaying all loans. (and in cases giving out Credit Cards after TDSR) The recession is not all to blame. The nonsense of Foreign Headoffices dictating their policies to strip mine all profits must stop. Bahamians know their markets, culture better. No bank is perfect and many have made mistakes and contributed to this mess. Pressure must be brought to these Banks to accept their responsibility between their customer and themselves being the other party. The taxpayers should not be another party to footing the bill. The Central Bank should be responsible in protecting the Consumers from banks putting customers at risk from predatory Banking practices, protect the Bahamas economy from foreign banks from stripping profits which are then taxed by foreign countries made by the sweat, tears and suffering of Bahamians. The nonsense of having banking empires made with sacrifices in enticing foreign capital with our BAHAMIAN BIRTHRIGHT to start businesses employ BAHAMIANS to get jobs and then loans at foreign banks which ship profits out AND NOW THE AUDACITY of them to ship jobs by the sweat of BAHAMIAN workers to have BAHAMIAN BANKING customer and confidential information on loans done by other countries like Barbados, Jamaica Trinidad is UTTER NONSENSE. Seems unregulated banking has devastated families, housing markets, businesses, insurance life and house, appraisers, contractors, repairmen, impacted share prices, etc and tied up some 800-900 million of banking. Banks are not perfect and the govt needs to make these banks to be held accountable for this GIGANTIC fiasco and not the average Bahamian taxpayers.
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