Government defends mortgage plan

Thursday, May 17, 2012

By SANCHESKA BROWN

Tribune Staff Reporter

sbrown@tribunemedia.net

MINISTER of State for Finance Michael Halkitis yesterday defended the government's proposed mortgage relief plan despite a negative and scathing review by a top Wall Street credit agency.

Mr Halkitis said Moody's credit agency did not fully understand what the government intended to do, and had based their report on "erroneous" assumptions.

"It appears that Moody's report dated May 14, 2012 erroneously assumes that every delinquent mortgage loan in the Bahamas will be taken over by the Government of the Bahamas and covered under the Mortgage Foreclosure Plan. In fact, the intent of the plan is to work on a case by case basis with those homeowners who, through job loss or significant reductions in income, are losing their homes," he said.

"The Progressive Liberal Party's Mortgage Foreclosure Plan, which was so overwhelmingly endorsed by the Bahamian people, was in direct response to the unprecedented number of hardworking Bahamians facing the prospect of losing their homes, the single largest investment that most people make in their lifetime. Our responsibility as a government includes, as we spend the people's money wisely, that we seek to assist the most vulnerable in our society."

Mr Halkitis said the government also intends to consult with banks and other lending institutions to keep homes out of foreclosure.

He said: "We will work with them to agree to a 120-day moratorium on foreclosures and work to obtain the agreement of the banks to a write off of unpaid interest and fees for those mortgages facing foreclosure. Through the plan, the government also commits to pass legislation, if necessary, to protect homeowners from foreclosure where they have paid back more than a certain percentage of their mortgage loans."

Mr Halkitis said the government was satisfied that on completion of consultations and implementation of the strategy, the Bahamian people will be satisfied that the Mortgage Foreclosure Plan is the right thing to do to save homes and to strengthen the economy.

The Moody's report said the mortgage relief plan would undermine the efforts to rein in the more the $4 billion dollar debt and implied it could lead to further downgrading of the nation's sovereign credit rating.

The report also warned the scheme will cost Bahamian taxpayers $250 million dollars to implement and will create a 'moral hazard' in the housing finance market that can lead to increase delinquencies.

Comments

Arob says...

The Government should be clear in what they intend to do, thus preventing misinterpretation. If Moody's did not comprehend the statement in the Charter, did the average Bahamian understand? What did the Bahamian people "strongly endorse"? (a) A mortgage past the retirement age 65 years? (b) a mortage that can be inherited by their children? (c) Increased fees to offset the slow repayment of mortgages? etc. Did insurance companies agree to insure loans of customers past the retirement age?

Posted 17 May 2012, 8:46 p.m. Suggest removal

perspective says...

THE PLP IS LOUSY GOVENMENT....PERIOD!!!.........TIME WILL PROVE THIS.

MAY 7TH 2012........THE BAHAMIAN PUBLIC WERE DECEIVED INTO MAKING QUITE POSSIBLY THE WORST DECISION IN BAHAMIAN POLITICS

Posted 17 May 2012, 9:51 p.m. Suggest removal

concernedcitizen says...

were they deceived or did the majority get what they want ,slackness ,corruption ,low cost gov homes with no mortgages,,the promise of mortgage payments ,nepotision for family and friends , less stringent mandatoury sentences ,,thats the 64,000 dollar questions??

Posted 17 May 2012, 10:03 p.m. Suggest removal

Victor says...

"In fact, the intent of the plan is to work on a case by case basis with those homeowners who, through job loss or significant reductions in income, are losing their homes," he said."

In other words, if you are a big PLP supporter, the government will help you with your mortgage. If you are just an average person or if, God help you, you are known to have supported the FNM or DNA, you are out of luck.

Posted 17 May 2012, 11:06 p.m. Suggest removal

you hit the nail on the head

Posted 18 May 2012, 10:47 a.m. Suggest removal

just heard A Newbold ,on immediate response tell a listener that he is going to talk to BR about the printed version of the charter for goverance ,,,,,guess now they got the treasury there will be lots of printed copies now ,,,

Posted 18 May 2012, 10:51 a.m. Suggest removal

In the ol' days (1980s), banks refused to give a mortgage that exceeded an applicant's two weeks pay. Today, however, Bahamians have mortgages that exceed a month's salary. Why? Did applicants lie about salary? Did the loan officer give favours? Were banks "just greedy"?
The PLP Government must stop the superficial knee jerk response. I suggest that education is needed not "bail out"! Bahamians need to understand finance (fiscal responsibility/budgeting) and their part or role in the stability of the Bahamian economy.

By the way, in the US, some banks found that it is in their long-term interest to destroy foreclosed homes rather than allow deliquent homeowners to squat. No bank wants to set a precedent of giving away stockholders' monies when customers are unwilling or unable to pay. This begins another cycle of failure -- company failure.

Tread carefully...

good comment ,,why is the canadian economy strong ,,because they didn,t give money hand over fist to people for homes that couldn,t afford them ,,,sitting under the tree this morning ,more talk of how God the great handicapper sent people the number in their dreams ,,we have reduce the Lord to a numbers forecaster ,,can,t see how the number man makes money ,when the betters have God on thier side .....unbelevable what our people have sunk to

Posted 18 May 2012, 12:18 p.m. Suggest removal