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Homeowner Protection Act Must Be 'Fair To All'

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Government plans to review the Homeowners Protection Act to ensure it "is fair to all concerned" following industry complaints, the Deputy Prime Minister has confirmed.

K P Turnquest told Tribune Business that the Minnis administration plans to consult with mortgage lenders and the Consumer Protection Agency over potential changes to legislation passed by its predecessor prior to the May 10 general election.

Disclosing that he had already received "representations" from the private sector, Mr Turnquest said the concerns centred on provisions seen as imposing overly-burdensome restrictions and 'red tape' that will further slow and already struggling mortgage/housing market.

The Deputy Prime Minister also expressed surprise that Sir Franklyn Wilson, Arawak Homes' chairman, would express concerns about the Act now rather than during the Bill's early 2017 passage.

"It's interesting that he would now comment on that when he was silent about it when they were passing it," Mr Turnquest said in reference to a recent Tribune Business interview with Sir Franklyn.

"Be that as it may, I've had representation from other entities regarding some of the provisions. We're going to look at it, consult with the industry, the Consumer Protection Agency, to make sure we have an Act that is fair to all concerned."

When asked what the main concerns raised with him were, Mr Turnquest said it related to the consequences of "interventions" triggered by various provisions in the Homeowners Protection Act. "It's just mainly about the objectives of the interventions that are brought on by provisions of the Act," he told Tribune Business recently.

The Deputy Prime Minister was speaking after Sir Franklyn called on the Government to "urgently review" the Homeowners Protection Act, branding it "a real disaster" for the Bahamas' struggling mortgage market.

A well-known Progressive Liberal Party (PLP) supporter, he criticised the Christie administration for "unnecessarily rushing" the Act into law so it could meet a 2012 manifesto promise prior to the May 10 general election.

He argued that it imposed overly-burdensome restrictions on what banks and other mortgage lenders "can and cannot do" in relation to their distressed properties, and introduced concepts and definitions that were unworkable in practice.

In particular, Sir Franklyn said the requirement that delinquent real estate assets be sold at 'market value' was unduly subjective, given that a single property could attract five different appraisal values from five different appraisers.

In addition, the Act prevents mortgage lenders from selling distressed homes to relatives of their staff, including cousins. Given the tight-knit nature of Bahamian society, Sir Franklyn said this requirement - especially given the absence of definitions - would be extraordinarily difficult to comply with "because almost everyone's a cousin".

With some $529 million worth of mortgage loans still delinquent at end-August 2017, Sir Franklyn echoed concerns previously expressed by commercial banks that the Act will further slow the sluggish housing market, thereby negatively impacting the real estate, construction and legal industries that rely heavily on it for business.

Mr Turnquest told Tribune Business it was "absolutely critical" to revive the Bahamian housing market if this nation's anemic GDP growth and employment prospects are to improve.

"We have to improve the quality of jobs such that the quality of loans rises, and get people back to work in the labour market to spur economic development and activities," he said.

"One thing works with the other. It's a matter of getting people back to work, and getting some of the liquidity in the marketplace to produce as fast as possible."

The Christie administration's rationale for developing the Homeowners Protection Act was to make delinquent Bahamian mortgage borrowers more secure in their homes, with all the attendant social and economic benefits that will bring if they can restructure their loans.

However, as indicated by Sir Franklyn, it threatens to increase the costs, time and difficulty/uncertainty incurred by banks in repossessing mortgage collateral - usually the homes and businesses subject to the original loan.

With a higher risk now associated with mortgage lending as a result, the banks may both hike interest rates and refuse to grant new Bahamian loan applicants access to credit.

This would impede Bahamian dreams of home ownership, with the banks having previously warned that home loan costs and accessibility could largely depend on how the courts interpreted the Act's provisions.

Ian Jennings, Commonwealth Bank's president, told Tribune Business in early 2017 that his institution viewed the legislation as "changing the risk profile of mortgage financing".

He added that Commonwealth Bank, and all other Bahamas-based commercial banks, would now have to each determine whether this impact was "material" enough to spark an increase in mortgage lending rates and/or a tightening of their borrowing criteria.

Suggesting that the latter could involve requiring borrowers to come up with higher downpayment or equity contributions, Mr Jennings said then that it was "too soon" to determine the Act's impact on the mortgage and housing markets.

The Act inserts the courts into the foreclosure and 'power of sale' process, requiring lenders to give delinquent borrowers 30 days' notice before either invoking their 'power of sale' under the mortgage or seeking a court-approved foreclosure.

In both cases, borrowers can apply to the Supreme Court for relief. On the foreclosure process, the court can either adjourn, stay or suspend the matter if it believes the borrower will be able to pay principal and accrued interest within six months.

As for the 'power of sale', the latest version of the Bill allows the court to postpone this for "a reasonable period where a sum equal to at least one half of the principal, and accrued interest, has been paid at a specified time".

Mr Jennings, in common with Sir Franklyn, said the Act's provisions included definitions that needed to be clarified by the courts. He pointed to clause nine, which empowers the courts to prevent a bank exercising its 'power of sale' for a 'reasonable time' - with no definition of 'reasonable time'.

Comments

bogart 1 month ago

How come such massive losses, economy devastated, 4000 martgage accounts in default and only the Mortgage Bosses talking about fairness?

This debacle destroyed so much and still cripples the Bahamian economy and the govt tried looking out for the common man.

The pore Black man or pore White one is always at a disdvantage when going up against large multi national global banks who seem to have the govt jn its grasp. And The rich always hang together looking out for themselves.

When you pore down an out nobody looks out for you,, believe you me, you aint have no friends, cept a few polliticians round election time.

Bizzare no investigations into this massive mortgage loan debacle.

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ohdrap4 1 month ago

remember, it was not the white man who bought the scotia bank mortgages.

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ohdrap4 1 month ago

But, on the other hand, people sit here and take it.

when RBC raised their monthly fees in Stkitts, people stormed the banks to close their accounts and the police had to be called in, even if to tell people not to take large amounts of cash home.

RBc here started charging 10 dollars to cash a cheque. People like it so much that the lines got even bigger, that RBC gave them more, it now costs 15 to cash a cheque. RBC now charges 2.50 if you drop a cheque to the cheque box.

people love it, they even like to be abused by the employees.

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happyfly 1 month ago

The banks don't give two hoots about anything but making their shareholders a bunch of profits, recession or not. Franklin, Commonwealth, your local loan manager, they aren't going to give up their healthy lifestyle so you can catch a break. Why nobody ever talks about drastically lowering the prime rate in this country to alleviate the problem is the most disgusting thing. The politicians keep the central bank prime rate high so that they can keep borrowing money for themselves to spend (steal) and the hard working homeowners are left with the highest interest rates and the highest unemployment rates. Is just one more way your leaders are smiling at you while screwing you

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bogart 1 month ago

Fair

Year after year who ever rules govt comprising of 40 or so dedicated Bahamians appinits Senior mansgement and Directors to run money failing agencies under their control.... BANK OF THE BAHAMAS MORTGAGE CPRP. DEVELOPMENT BANK, BAHAMASAIR, WATER AND SEWAGE BEC ETCETC

Yet to date noone has been jailed for failings or investigations ad though nothing illegal was done wrong.

There really needs to be persons looking out for the small man.

We need to separate tje functions of the Central Bank whose Govenor and Board of Direvtors are appointef by the winning party.

As in the UK where the local politicians like to say they have similar systems but differ csuse at the slighest UK scandal they resign but here it isnt so.

We need as in the UK a FINANCIAL CONDUCT AUTHORITY TO MONITOR AND OVERSEE THE BAHAMIAN BANKING SECTOR. Bahamians cannot afford to hsve all these financial failongs and irregularities continue with the apparent overview and appoints by any 40 Bahamian members of Parliament

Sadly it seems that only the voters are wrong and get what we deserve as whosoever is in power gets their own TV CHANNEL and talk all sorts of important things about makong things better and these agrncoes still lose money.

Ohdrap5 you mean to say that the man who bought scotia mortgages wasnt white?

You are correct happyfly.

The appoints OF THE Central Bank Govenor and Dorectors so in light of the lack of caring and enabling stabi.ity to knowingly oversee that 100% BANKFEE INCRRASE WILL BE DETRIMENTAL AND CAUSE A RUCKUS ALBBEIT SLOWER THAN ST KITTS PEOPLE especially in a country a glober leader in proper financial dealings is certainly questionable. Persons responsible certainly should be promoted and put in a more important position.

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