The government’s mortgage relief plan, which is meant to bring relief to struggling homeowners, could be compromised if lending institutions outmaneuver the government and tip the scales of the plan in their favour, a leading real estate developer warned yesterday.

Chairman of Arawak Homes Franklyn Wilson said while there is urgent need for action to be taken to address the mortgage crisis, the government must be mindful that some financial institutions will try to use any relief plan intended for borrowers to their own advantage.

“One of the challenges in this instance is that the banks could well see an opportunity to, in effect, turn this from a borrowers’ relief plan to more of a lenders’ relief plan where the banks could seek to use the government’s initiatives to try and undo what may have been some bad judgments on the part of the banks,” Mr. Wilson said.

“This is a matter where the government has to be very careful in towing the line on this. The fact of the matter is, the idea in the Charter for Governance was a borrowers’ relief plan; the banks are in the position, if they feel the government is unduly pressured to act quickly, to turn that in to a lenders’ relief plan and so there is need for caution.”

On Friday, the Bahama Journal reported that the Christie administration reached a deal with the Central Bank of The Bahamas and the Clearing Banks Association (CBA) on eligibility requirements needed for its 10-point mortgage relief plan to move forward.

Among the parameters agreed to by the parties were that homeowners would only qualify if their mortgages did not exceed $500,000; the mortgages must be for residential homes, inclusive of owner-occupied duplexes; applicants must be unemployed, underemployed or suffering from a chronic illness and the parties agreed that the mortgages had to originate prior to January 1, 2009.

Mr. Wilson, who served as a consultant for the Progressive Liberal Party’s (PLP) campaign and reviewed the plan before it was made public, said that greater action on the part of the government will ultimately determine how quickly the country begins to see a dip in the number of foreclosures and people struggling to keep their homes.

“The government can amend laws to give people stronger rights and these are very important long-term for the country,” he said. “These are transformative changes so let’s not get so preoccupied with 10-pont plan because five of them I believe are clearly within the purview of the government. And those five have the potential to be very significant for homeowners indefinitely.”

Included in the PLP’s Charter for Governance plan for bringing relief to homeowners is a promise to work with banks to have 100 per cent of unpaid interest and fees for people close to foreclosure written off.

Additionally, the party has promised to work with banks and other lending institutions to extend repayment periods on defaulted loans, enact a 120-day moratorium on foreclosures, encourage a reduction in the interest rate on mortgages, extend the first-time homeowners exemption for stamp duty to those who lost their homes to foreclosure and are seeking to buy again and pass any legislation needed to stop owners from losing their homes.

Some critics have called the plan “unrealistic” and others have dismissed it as nothing more than political rhetoric, but Mr. Wilson warned that with the high volume of foreclosures impacting new home sales, inaction on the part of the government would be even worse.

“The first thing is to recognise that there is the need for government action. The fact of the matter is that the number of people whose homes are in foreclosure is too substantial to just be ignored. The need for action is clear. It is difficult to see how the home construction sector can be energised without that,” Mr. Wilson said.

“In seeking to find a solution to this problem only a part of it involves banks and lenders. The other part of it involves changing of laws. There is nothing unrealistic about changing laws to give home buyers a degree of protection comparable to what home buyers in the United Kingdom have.”