|McCartney: Christie late with PLP Mortgage Relief Plan|
|Monday, 02 April 2012 14:43|
During a recent Progressive Liberal Party (PLP) rally, Opposition leader Perry Christie said he will tackle the mortgage crisis with a win in the next general election. The PLP leader laid out a 10-point plan that he says will assist Bahamian homeowners in times of possible foreclosures.
One of the PLP’s plans is to ask commercial banks to write off 100 percent of unpaid interest and fees for people facing foreclosures. The Democratic National Alliance (DNA) reminds Mr. Christie that banks are in the business of making money and that banks make their money from interests and fees.
DNA leader Branville McCartney said, “Christie’s view is naive and he is not thinking clearly. He is thinking in the context of gaining support for the next general elections. Christie should really be focusing on getting Bahamians back to work and back to operating their businesses. This will help in Bahamians being able to pay their mortgages.”
The Free National Movement (FNM) in 2008 said they would offer assistance to homeowners whose homes were about to be foreclosed. Four years later, after thousands of Bahamians have lost their homes and properties, the FNM government has failed to deliver on its promise.
McCartney said, “The government should have directed the Central Bank of the Bahamas to lower the prime interest rate. This would have lessened profits of the commercial banks in the short term, but thousands of Bahamian homes could have possibly been saved.”Despite the FNM’s pledge to assist Bahamians to keep their homes, this has proven to be just rhetoric. Minister of State for Finance, Zhivargo Laing essentially said that the government reneged on its promise to help Bahamians, because the commercial banks had already started their own programs of assistance. He said that the government could do nothing else to assist homeowners.
The PLP’s newfound 10-point plan to help Bahamian owners maintain their homes is unfounded and impractical. The DNA sees the PLP’s plan as another of its election ploys, as the party had five years as opposition to direct these ideas and a previous five to implement them. Mr. Christie should note that the recession began in 2008, giving him ample time to address this issue.
On February 15, at the DNA’s People’s Summit 2012, Mr. McCartney reiterated the Party’s proposal to address home foreclosures and burdening mortgage rates. See an excerpt from his speech below:
“Thousands of persons are losing their homes. Never before in the history of the Bahamas have so many families suffered the humiliation, personal loss and social dislocation associated with the loss of their primary financial asset, their homes. What I find particularly disturbing is the fact that many Bahamians could still be in their homes today if the Government had encouraged the Central Bank of the Bahamas to reduce the Central Bank Rate from 5.25% to 2.25%. Had rates been lowered three years ago many more Bahamian families would still be in their homes today!!!! Indeed this is a case of economic mismanagement, which has caused an ongoing social tragedy.
We believe that that there are three possible solutions to this foreclosure issue, which could help to reduce the number of foreclosures. Firstly, the Government needs to immediately ensure that there is a reduction of the Central Bank Rate which will result in a decrease of the mortgage lending rates and, thus lower monthly mortgage payments for all concerned. Secondly, the banks need to adopt the mindset that it is better to have an apple than lose the whole apple, which means that they should take a financial “haircut.” By this, I mean that they could reduce the principle on their troubled mortgages by 50% and lower the interest rate on the mortgages, which in many cases would allow families to retain their homes. Thirdly, the government could have reduced its expenditure on some of the infrastructure work and put these funds in say, the Mortgage Corporation’s loan portfolio (or another entity such as a Foreclosure Fund) created for that purpose. These funds could have been used to buy distressed loans from the Bank at a 50% discount from the original loan value. Then these homes could have been refinanced for the original homeowners at an interest rate of 3-5% which in many cases would have made mortgage payments affordable for families.
A big part of the Bahamian Dream is home ownership and it is most unfortunate that this dream has become a living nightmare for many families because of circumstances beyond their control and a government that refuses to make use of monetary policy initiatives as has already happened globally.”
The Party maintains that the focus should be about getting Bahamians to where they were prior to the recession of 2008. Mr. McCartney said, “We stand firm in our belief that a national development plan is needed to move our country forward and that the Bahamas will always be put in a precarious position if we don’t change our fiscal and economic course now. The time has come for real change and the DNA will be that vessel that takes the country to the next level.”
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