The Tribune

By KHRISNA VIRGIL

Deputy Chief Reporter

kvirgil@tribunemedia.net

THE government’s revamped mortgage relief programme has assisted 350 Bahamian homeowners since it was reintroduced, Prime Minister Perry Christie revealed yesterday.

With less than five months until the next general election, Mr Christie said this facet of the government’s mortgage programme reduced the homeowners’ monthly payments by 25 per cent making them now affordable - where they were once unmanageable.

He called this a “significant” turnaround from the failings of the government’s first attempt at mortgage relief. Assisting struggling homeowners was one of the Christie administration’s campaign promises ahead of the 2012 general election. It was implemented early in this term, however the programme under performed, leading Mr Christie to admit in 2013 that only four or five homeowners were expected to receive assistance.

“The government, in a collaborative effort with the Clearing Banks Association, has launched a multifaceted mortgage relief programme,” Mr Christie said during his keynote address at the 26th Annual Bahamas Business Outlook yesterday.

“One facet is an affordability programme, which today has assisted over 350 Bahamians in reducing their monthly payments to make their homes, which were previously unaffordable, affordable through a reduction of monthly payments of 25 per cent.

“Another element of the programme would be the introduction of a new Homeowners Protection Bill in the House of Assembly along with the Members of Financial and Corporate Services Act and the propagation of rules for money lending under the act.

“This compendium of legislation will introduce for the first time in the Bahamas clear rules around the entire mortgage process from mortgage origination to foreclosure. It will set the establishment of responsible practices, which contributed to the mortgage crisis.”

He continued: “The final element of the mortgage relief effort will be the introduction of credit reporting with this legislation.

“This is extraordinary and will be significant and we will try as best we can during the final weeks to introduce the Homeowners Protection Bill because it is a landmark piece of legislation. We are supposed to have consultations with the member of Parliament for Marco City who formed a new party. But we can tell you that we have had significant improvement.”

Last year, Mr Christie announced plans to revive the scheme, revealing that it would cost taxpayers $20m over four years.

During his last budget communication, Mr Christie said his administration designed a “comprehensive” mortgage relief programme in collaboration with the Clearing Banks Association to assist borrowers negatively impacted by the financial crisis.

At the time Mr Christie said the revamped programme was expected to 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.

“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 last year.

“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 was fully aware that the 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.