NASSAU, BAHAMAS – A judge has denied a credit union’s attempt to seize a woman’s mortgaged property due to failure to adhere to the stipulations of the Homeowner Protection Act despite the mortgage being in default for nearly nine years.
In an October 11 decision, Justice Camille Darville Gomez found that the Teachers Salaried Workers Cooperative Credit Union needed to adhere to Sections 4(1) and 7(1) of the Act. The legislation, introduced by the former Christie administration, was designed to help delinquent borrowers at risk of losing their homes. However, it has raised concerns among lenders regarding their ability to repossess or sell distressed properties and concerns over their heightened reluctance to extend new mortgages due to the associated risks.
In the matter of Heidi Lynn Rolle and Teachers Salaried Workers Cooperative Credit Union, the credit union sought a judgment for vacant possession and an order for the sale of Rolle’s property in High Vista. Rolle, however, sought to dismiss the action and for relief under the Homeowners Protection Act. The action was commenced on February 16, 2022, by way of originating summons. The applicant sought judgment for $226,920.76, delivery of the property, and an order enforcing the sale of the property.
In an October 26, 2022 affidavit, Rolle, who was represented by attorney Wilfred Bain, raised concerns that she had not received prior notice before the commencement of the action, as required by the Homeowner Protection Act 2017. She explained her financial difficulties in servicing her mortgage account after her contract with the Ministry of Finance was not renewed in 2014, during the COVID-19 pandemic in 2020, and following a traffic accident in 2021. She sought to have the proceedings dismissed as an abuse of process, asserting that when the action commenced, she was in active discussions with the respondent, seeking a way forward in terms of payments to satisfy the outstanding amount, and had provided all requested documentation. She contended that she did not receive notice of the proceedings as required by Section 7(1) of the Homeowner Protection Act and noted that from January to July 2023, the respondent had signed a temporary forbearance agreement, to which she had complied.
The loan was granted to her in August 2011 for the sum of $162,800. The judge noted that Rolle admitted in her affidavit that up until late 2014, when the first default occurred, her mortgage had been consistently paid. She then became unemployed. By 2017, she obtained full-time employment and immediately made arrangements to resume payments but faced difficulties again in 2020 when the pandemic began, noting that she was self-employed and impacted by the lockdowns.
The judge noted that from as early as two years after the mortgage was granted, Rolle went into default and remained so until 2017 when she obtained full-time employment and resumed consistent payments. However, she defaulted again in 2020. On this occasion, her evidence showed that the lender worked with her and did not commence legal action. The parties entered into a temporary forbearance agreement for a consecutive six-month period beginning in January 2023, but she only made five payments.
The credit union, which was represented by attorney Cedric Moss II, for its part, noted that it had made every reasonable effort since the commencement of the action to negotiate, compromise, and restructure payments but to no avail, with Rolle’s account being delinquent for 3,239 days, or 8.8 years, for $147,328.63. It was also noted that in April 2018, the Credit Union agreed to a reduced payment based on a promise by Rolle to permit them to collect rent from the mortgaged property and pay an additional $500 monthly. However, Rolle prevented the Credit Union from collecting rent and ceased payments, thus nullifying the agreement. Rolle made nine payments in 2019 after signing the agreement: one payment in 2020, two payments in 2021, two in 2022, and five payments in 2023.
“It is both plain and obvious that the respondent was in breach of the mortgage terms from 2014 and remains in breach to date. Therefore, she has failed to show that the action is frivolous, vexatious, and an abuse of the court process. However, Sections 4(1) and 7(1) of the Homeowner Protection Act impose a mandatory obligation on the mortgagee to inform the mortgagor of their rights as set out in the provisions. I am thereby constrained by these provisions,” the judge stated.
The judge continued: “The claimant has failed to observe the HPA and is therefore prohibited from instituting proceedings. Accordingly, the action is struck out. The claimant is free to commence fresh proceedings that comply with Sections 4(1)(e) and 7(1) of the HPA.”
Section 4 of the HPA provides that before initiating legal proceedings, lenders must give at least 30 days formal notice to borrowers outlining the nature of the breach, the amount of arrears owed, if any, the amount of administrative or other costs, including property tax and insurance costs, the actions the mortgagor must take to cure the breach and avoid foreclosure and the right to apply to the court for relief.
Section 7 of the Act provides that when a mortgagee executes a non-judicial power of sale, it must also give the mortgagor at least 30 days prior formal notice and include the same particulars in that notice.
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