The Tribune

By Youri Kemp

DNA Candidate

Garden Hills

The PLP’s proposed Mortgage Relief Programme Needs More!

We in the DNA are happy that the current administration has admitted their failures with regard to the initial mortgage relief programme and now is deciding to work with a new version of a Mortgage Relief Programme in the Prime Minister’s Budget Communication.

The fact of the matter is this issue has gone on too long; persons have been hurt and left ashamed due to losing their greatest investment; and long-term damage has been done to lives and communities.

The details are still sketchy with regard to what this administration outlined in their budget communication in relation to their mortgage relief plan, which some are calling a Homeowner’s Protection Scheme, but we wish to weigh in on this because the DNA has presented an initial proposal for mortgage relief which we feel strongly that the government should take into consideration. And, if it does not, a DNA government will begin its phase and do more for Bahamians with regard to home ownership and mortgage relief.

The DNA has gone on record with stating that we must work with the banks and mortgage lenders. Not only is it the common sense thing to do as it is the banks money that homeowners borrowed, but also, it is the banks that assessed Bahamians for those mortgages, thereby creating a shared responsibility with a DNA government for fixing this problem.

We also feel that it would be disingenuous for any government to tell the electorate, if the conversation leads in this direction, that they can force the Bahamas court system to indefinitely keep delinquent homeowners in their homes without re-structuring the terms of their mortgage; or do so without using the avenues currently provided in the system with the banks and mortgage lender; or without them at least having to pay into the system, if even to just keep the interest current on the mortgage. For any government to act along those lines of reasoning is dangerous at best, for all the right reasons and impossible to do, at the worst.

Also, dismissing banks out of hand in this equation would lead to possible retaliatory practices and unintended consequences, from and within banks if we cause disruptions to their business model; it would also penalize them to the point where they would pass the costs down the line in other areas or cut staff; and as equally as important, send the wrong signals to the market and the international financial community that The Bahamas Government can and will prematurely intervene with routine banking business to achieve a social and/or political end, without exhausting all avenues within the market to do so or create a market-system that is fruitful for all stakeholders.

In fact, from what we were led to understand, the initial mortgage relief attempt - as vague as it was from the current administration - was rejecting out of hand banking input and thus why the relationship on this effort soured and the government tried to do it alone, without much success as we all know now. The DNA feels we can do better than this!

The DNA does not want to create more problems trying to fix just one. The Bahamas has enough problems as it is. This mortgage crisis is a gigantic problem, bigger than anyone can imagine and is just as much of a catastrophe as the Baha Mar Resort or the unyielding crime wave.

The DNA wants to reiterate quite clearly: We will work with the banks and mortgage lenders from day one! This means several things. For example, we will encourage the banks to identify homes that can be saved right now and give us their listing and their risk matrix, subject to our approval and input as to how far the government wishes to extend itself to facilitate this initiative.

Secondly, we will cause there to be a re-mortgaging of these mortgages and any borrower in default due to difficulties that can be rationally explained and verified, the government will pony up the funding to the point where they are brought back into the black, at the very least; and if the case may be, structure it in a way that gives them a common-sense grace period before payments kick back in. The banks do this now on their own without government intervention, but in many instances the graces and leniency have been exhausted for many homeowners and as a stop-gap measure we feel it necessary that the government kicks in to give them one more chance.

In addition to this, we will capitalise banks to co-administer this initiative with the government through either direct loan from the central government; partnership with the NIB fund; and/or a bond issuance to the desired amount of cash determined feasible for the first efforts. The other core problem with the first attempt at mortgage relief from this current administration was that they went it alone and persons ended up indebted to the central government, and did not have a chance to be re-invested into the economy.

A second pillar for a DNA strategy for helping homeowners has to be with regard to eliminating adjustable rate mortgages for homes under a certain threshold. During our research we have found that many persons that are in mortgage related trouble now, and have lost their homes just recently, were victims of adjustable rate mortgages that came due at the worst possible time.

The DNA has gone on record with regard to several other key proposals we will implement when we become the government and what we hope the current administration considers and begins in earnest the hard work needed to secure Bahamian families: We will cut the Central Bank rate and add more flexibility to achieve our objectives; we will put recently evicted persons back into their homes under the same terms; and we will engage development companies and insurance companies and other investors with regard to purchasing and repackaging bad mortgages, whether persons are in the homes, want to move back into their homes, or want to move into a home previous owned.

The DNA also wishes to reject the lazy rhetoric coming out of certain quarters with regard to some copping out of helping homeowners by saying that jobs and employment is the only thing that can help this mortgage crisis. The Bahamas has a problem now, and waiting on this administration to create good paying jobs will not happen any time soon; and in addition, smoothing payments out in the short term until they find new or better employment is a part of the dynamic of a Bahamian mortgage relief programme.

In any event, we are delighted that the administration is going back at mortgage relief for this fiscal year. We just wish they consider a more holistic approach, put their backs into the effort and do premium work for Bahamians. Bahamians truly deserve it. Even though some may not feel optimistic about this current administration’s efforts, the DNA wishes to go on record with our suggestions on mortgage relief during these tough times on doing what is right for Bahamians!