Minister of State for Finance Michael Halkitis, told the House of Assembly, on August 15, 2012, that the Mortgage Relief Plan that he presented that day represents the culmination of work among his Ministry, the Central Bank of The Bahamas, the Clearing Banks Association and other authorised mortgage lenders.
On behalf of the Government, I thank all stakeholders for their efforts and for their commitment to work with the Government to help craft a plan that is effective and relevant,” Minister Halkitis said.
“I am fully confident that other regulated lenders, including insurance companies and credit unions, on reviewing the Plan, would see the merit in participation. The Plan is also applicable to mortgages issued by the Bahamas Mortgage Corporation.”
Minister Halkitis said that, in earlier Communications to Parliament and in public comments, the Bahamas Government has stressed its commitment to bringing forward a plan which benefits from the input and consensus of all the major stakeholder; provides real relief to persons who have been adversely affected by the effects of the recession or other financial adversity and which is financially prudent and takes into full account the Government’s position.
“I am pleased to say that all these conditions have been met with this Plan, which in now being presented,” he said.
The work, however, is not done, Minister Halkitis stated.
“Our investigation of the causes of mortgage distress has uncovered structural deficiencies in our system,” he added. “These deficiencies include the lack of adequate consumer education, the absence of a credit bureau and sufficient mechanisms to provide protection to borrowers and lenders in the foreclosure process.”
In this regard, Minister Halkitis said, the Government had recently circulated to the Clearing Banks Association an early draft of a Borrowers Protection Bill. He added that the Government reiterated its commitment to ensuring that structural issues in the country’s lending system are addressed and that it is done with full and meaningful consultation of all regulated lenders.
“This Plan, along with the draft pension legislation and the previously-mentioned Borrowers Protection Bill, combined with the recent amendments to the Stamp Act to allow access to stamp tax exemption for persons who have lost their first home to foreclosure essentially covers all of the points within the 10-point Mortgage Plan put forth in the Charter for Governance,” Minister Halkitis said.
“However, the focus of this Communication is the Mortgage Plan, which would be put in place by the first week of September, 2012. This date is to allow lenders participating in the Plan to prepare themselves administratively.”
Minister Halkitis said that the Plan would be limited by a six-month deadline for application and is open to all regulated financial institutions.
He added that funding for the principal payment for the Bahamas Mortgage Corporation (BMC) clients would come for a different source of funding, as opposed to the source of funding for clients of private financial institutions, so there would be a “level playing field” between BMC clients and private financial institutions.
“The Plan, we believe, would significantly increase the probability of a person with reduced circumstances maintaining their home until their own personal circumstances improve,” Minister Halkitis said. “The size of the commitment under the Plan could be up to $22,500 for eligible borrowers.”
Minister Halkitis said the Plan as it is now is the initial process as envisaged by the Clearing Banks and the Ministry of Finance. However, he said, the Ministry and regulated lenders would continue to review the Plan to ensure that there equitable participation for all Borrowers and that it meets the requirements of all interested lenders.
“The Government would also require uniform procedures for accessing this Plan by clients of the regulated lenders,” he said. “In this regard, guidelines for accessing the Plan would be published on the Government’s website, as well as the website of all participating institutions and that of the financial regulators.”
He added that is clear that the economic downturn has had a tremendous effect on Bahamians, including to the point where hundreds of our people facing the prospect of losing their homes.
“In the face of this reality, a government must take a philosophical decision whether to act or whether to stand by and let matters take their course,” Minister Halkitis said. “We recognise the economic and social benefits that are gained by the country as a whole, from assisting people to save their homes. We equally recognise the limitation of Government’s resources and our duty as stewards of the public purse.
“We believe that we have, with the stakeholders, crafted a plan that will bring relief to homeowners and the associated benefits to society and that is financially responsible.”
By Eric Rose
Bahamas Information Services
