NASSAU, BAHAMAS — The Clearing Bank’s Association (CBA) president yesterday expressed concern that even fewer Bahamians will be able to qualify for mortgages if “adjustments” are not made to the Homeowners Protection Act.
Kenrick Brathwaite, the CBA president, told Eyewitness News that mortgage delinquencies brought on by the COVID-19 pandemic are an obvious concern, but of even greater concern is the fate of the mortgage market if fewer Bahamians are able to qualify.
Braithwaite noted that the Homeowners Protection Act passed under the former Christie administration created restrictions on what banks and other mortgage lenders can and cannot do in relation to their distressed properties, which pose considerable challenges.
According to the Central Bank, during the month of November, mortgage delinquencies expanded by $37.4 million (8.5 percent).
“The Central Bank has been very encouraging with regards to how we treat those accounts. We expect the hotel industry to rebound sometime in 2021. We are working with mortgage holders. Banks don’t want to be in the business of selling houses, so they’re going to do all they can to ensure that persons can retain their homes,” said Braithwaite.
He added: “The elephant in the room is really the Homeowners Protection Act. That was created to give, as it says, protection to homeowners. The challenge with that is it also changes the risk profile of a customer.
“I’m more concerned with the mortgages that we put on the books as opposed to those that are already existing. Each bank, I’ll have to look at their portfolio and their strategy going forward to see which customers they want. The risk profile has changed to the extent that fewer people will even qualify for a mortgage.
“We have had discussions with the government in terms of making adjustments to that legislation.”
The Homeowners Protection Bill, 2017 was designed to assist responsible homeowners who fell on hard times and needed an opportunity to readjust.
The Act prevents mortgage lenders from selling distressed homes to relatives of their staff, including cousins, which Brathwaite cited as one of several issues lenders are challenged with.
“When you tell us we can’t sell to even cousins or persons who work in the bank or board members, you are restricting the resale market significantly. The biggest challenge is the court action issue, that a court action can be stayed,” said Brathwaite.
“I think the mortgage market is going to shrink even more than it has in the past. There are persons who are on the borderline now, in terms of qualifying, who are going to find it even more difficult to qualify for a mortgage in the future.”