Categorized | National News

Mortgage Plan Launches 9/10 – Government Adopts ‘Hands Off’ Approach

The government’s much-touted and highly anticipated mortgage relief programme will be launched in exactly one week, promising crucial aid for more than 1,000 Bahamians who are at risk of losing their homes.

And despite what many critics claim is a Progressive Liberal Party (PLP) plan to help party supporters only, Minister of State for Finance Michael Halkitis said there will be no government involvement beyond setting the guidelines.

On September 10 the Christie administration will officially launch the programme aimed at helping the limited number of Bahamians whose homes are in foreclosure and who qualify for the plan.

Mr. Halkitis said on a local radio talk show said Sunday that beginning next Monday, local banks will be able to begin restructuring the mortgages for 700 to 1,300 mortgages, giving thousands of Bahamians the help they need to save their homes.

“We will publish in the newspapers (today) the eligibility requirements,” he said. “The banks want to start on (September 10) which is the following Monday. You are to go to your bank and tell them you want to find out if you eligible for the mortgage foreclosure plan.”

“The banks will have individuals in place to assess your eligibility. We did not want to have any sort of government approval necessary for you to qualify. We told the banks the clients will come in and they will assess them based on the guidelines. We do not want any situation where the government decides who qualifies.”

Mr. Halkitis reported recently that the requirements for eligibility to participate in the plan are that the homes would have to be owner occupied primary residence properties only, including owner-occupied duplexes, with the exception of vacant lots. Also eligible would be revenue-generating investment properties. The mortgages must have originated prior to January 1, 2009.

He added that the outstanding mortgage principal amount should not exceed $500,000.

The eligible participant will have an acceptable credit history prior to June 30, 2008, and the loan must be delinquent due to documented financial hardship caused by involuntary unemployment, under-employment or chronic illness.

“Individuals wishing to participate in the mortgage relief plan will apply through their lender,” he added. “The lender would review each applying borrower’s circumstances and determine what an affordable mortgage is, given the reduced income of the borrower.”

“The difference between this affordable amount and the actual mortgage would be the gap, which would be addressed by the plan through rewriting the mortgage loan into two loans; a serviceable loan and a deferred loan. The government would contribute an amount equal to one-third of the difference between actual mortgage balance and what the client can service up to $7,500 to permanently reduce the balance of the deferred loan and the client’s total mortgage debt.”

He added that the lender would rewrite the remaining difference, a minimum of two-thirds of the gap, as a separate loan at zero percent for up to three years.

So far, with these requirements, Minister Halkitis said up to 1,300 mortgages will be restructured under the plan, numbers the government’s critics have derided as insufficient.

“We believe we will affect about 1,000 with commercial banks and about 300-odd people with the Bahamas Mortgage Corporation. So if we are able to do that we think this programme would be tremendously successful. So it’s nothing to scoff at, even if we save 10 homes it would be successful.”

“In my mind, if we can save 700 homes, we would have done a tremendous amount because we would not have 700 homes on the market trying to be sold, but you have 700 families who can stay in their homes and you can appreciate the trauma of losing your home, even on the children.”

As time goes on, Minister Halkitis said the government will evaluate the plan to see if there are any adjustments needing to be done.

He said during the programme’s first few weeks in operation the government will see if it is reaching as many people as possible and if necessary, they would tweak the plan.

Eligible borrowers could get up to $22,500 under the plan.

Written by Jones Bahamas

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