By SANCHESKA BROWN

Tribune Staff Reporter

sbrown@tribunemedia.net

THE GOVERNMENT has accelerated talks with several financial institutions, including the Central Bank, for a speedy but comprehensive Mortgage Relief Plan that is acceptable to all major stake holders, Minster of State for Finance Michael Halkitis said yesterday.

According to Mr Halkitis, as of March 2012 there were 3,927 mortgages delinquent in the commercial banking system. 

Of that amount, only 340 were delinquent prior to January 1, 2008. The total value of these mortgages was $583,525,384. Of that amount the vast majority, or 2,198, were single family homes with a value of $293,350,877.

Mr Halkitis said these figures reflect a crisis which from all indications was replicated among other licenced lenders.

He said while commerical banks and other lenders understand the extent of this problem and have taken a proactive apprach to addressing it, there is still a need for government intervention.

“In the commercial banking sector, about 40 per cent of the mortgages for single family homes are enrolled in some form of relief programme. This limited programme of relief has been met with limited success with only 42 per of these loans now delinquent. It is clear that without the government’s involvement, this process, although well meaning, would not be enough to provide the necessary relief for many homeowners,” he said.

“In this vein, the Ministry of Finance has requested the Central Bank to engage in dialogue with the Clearing Bank Association (CBA) about the Mortgage Relief Programme. The CBA, which collectively are the largest holders of mortgages in the financial system has been very receptive and is working with the Central Bank and the government on a comprehensive plan.

“The Ministry of Finance has also initiated a separate dialogue with the other regulated financial institutions (ie credit unions, insurance companies and other firms in the sector) to ensure that the final plan agreed is acceptable to all of the major stakeholders.”

Mr Halkitis said elements of the plan under discussion include consumer education, the availability of credit, and the provision of sustainable assistance to qualified borrowers.  

He said the government will also be proposing guidelines in respect to lending protocols which would provide clarity and structure for financial institutions and borrowers during the delinquency and foreclosure process. 

Mr Halkitis said while those affected by the recession will be given priority, all borrowers will benefit from the plan.

He said: “Fiscal realities will dictate the level and nature of relief afforded under the plan. In this regard, the focus for financial assistance is on individuals who have been impacted by recession or the onset of chronic illness. However, it is expected that all borrowers and lenders would benefit from the new framework of rules under discussion.”

Mr Halkitis said it is expected that the full plan and the new framework of rules, which will be codified in legislation, will be presented to Parliament within the coming weeks with the full support of all of the major stakeholders.