NASSAU, BAHAMAS – A well-known accountant yesterday suggested banks were effectively protecting their interests amid complaints that persons have not been able to use Dorian insurance pay-outs as they have been applied to bank loan arrears.
Gowon Bowe, a former chairman of the Bahamas Institute of Chartered Accoutants (BICA) told Eyewitness News Online the issue must be put in its proper context as there different categories of customers in this regard, each with different history that must be taken into consideration.
Bowe noted that for individuals who have significant arrears and what are considered non-preforming loans, the home effectively becomes the property of the bank.
“If a person is a delinquent burrower and has made no effort to pay, they are not the rightful and legal owner of the property and in any event have no part in the decision making process as the bank was already in the process of repossessing their home,” said Bowe.
He said: “If we look at in its basic form, if you have not paid for an extended period of time, the property that you pledged as collateral is now property of the bank. When an event takes place where loss happens and insurance proceeds are received, in reality it is not different than the bank saying I could have sold the property or I can take the insurance proceeds and apply it to the outstanding balance.
“If you fail to meet your mortgage payments in good times the bank has the authority to take your property in order to recover the collateral.”
Bowe also noted that there are customers who make efforts to pay their mortgages consistently, even if they are unable to do so in full.
“The bank has a vested interest in seeing the property restored to its previous value. No bank lends money with the view to take possession of the property, to be a landlord, realtor. For those making payments and having fallen on hard times it is more about them demonstrating a plan to continue paying going forward and the bank will look at how they allocate insurance proceeds to cover arrears and make sure they have a viable plan.”
Bowe stressed that the issue must be looked at in its entirety.
“I think we get a lot of sentimental conversations over whether the banks are being fair because they are taking insurance proceeds but we have to look at the entire picture and question whether the borrower s honoring their commitments,” he said.
“We as a society have to be careful of holding the belief that when we borrow, the lender doesn’t need the money back.”
Deputy Prime Minister K Peter Turnquest earlier this week confirmed that he recently had discussions with the commercial banks over complaints persons have not been able to use Dorian insurance pay-outs as they have been applied to bank loan arrears.