By NEIL HARTNELL
Tribune Business Editor
The Clearing Banks Association's (CBA) is again urging the government to focus its low-cost housing effort on buying distressed properties rather than developing new subdivisions.
Gowon Bowe, pictured, told Tribune Business that such a shift would generate greater benefits for the wider Bahamian economy by helping to kick-start the construction industry, along with new lending by commercial banks and others, as their bad loans became performing once again.
He argued that using Crown Land for low-cost housing subdivisions was "not an efficient" or productive use of such assets given that there were multiple under-utilised properties that could be acquired from the banks at low prices.
Suggesting that such a solution would hit multiple requirements for a Bahamian economic recovery, Mr Bowe said non-performing loan write-offs, sales and provisioning was not the answer to the $500m non-performing loan hangover for the commercial banking sector.
"If the homes underlying these loans are delinquent then we have no activity in the home construction market," the Clearing Banks Association chief explained. "Ultimately, I don't think the banks simply setting them aside or taking provisions is going to change the economic fundamentals underlying non-performing loans.
"How do you convert them into performing loans? That may mean greater emphasis by the banks using the court system to take possession. Where the Government is looking at housing developments, the focus should be on buying these homes at cents on the dollar, fixing and refurbishing the, and selling them to the long list looking for a home with the Government."
Besides "cleaning up the distressed property inventory", Mr Bowe argued that such a strategy would revive the struggling domestic construction industry, encourage new mortgage lending and stimulate wider economic benefits through encouraging the Bahamian home ownership dream.
"Just put it in numbers terms," he said. "If a typical low cost house is $120,000, the Government can look at buying a distressed property for $90,000, spend $30,000 on renovations and spend the same $120,000 that they're doing with low-cost housing.
"The Government sees itself as not having to pay for the land as it has Crown Land available, but it is not an efficient use of Crown Land as they are using productive property when there are existing properties not being utilised."