Homeowners Protection Bill Debated
By Kendea Smith:
Lawmakers in the lower chamber yesterday began debate on the Homeowners Protection Bill, which is designed to assist struggling homeowners facing “extraordinary” circumstances to keep their homes.
Moving the Bill in the House of Assembly was State Minister for Finance Michael Halkitis.
“This Bill represents a modernisation of the lending framework in The Bahamas and creates a level playing field between borrowers and lenders. All of the provisions in the legislation have been benchmarked against international standards and hence are the standards that are in for in the home countries of the major lenders,” he said.
When passed, the court will be empowered to provide relief to borrowers from the consequences of breach of a loan agreement where the borrower pays the arrears by a reasonable time to be determined by the court.
The Bill also provides for the transfer of mortgages between financial institutions at no cost for the borrower.
In addition, the lending institution may sell after one year of giving a notice to default.
And if the lender sells the home at a surplus, the lender must give the borrower that money.
The minister said the bill has had widespread consultation.
“We continue to work hard to bring relief to homeowners who have mortgages and have fallen into difficulty. We face many challenges but we are committed to keep working to help as many as we can. We believe that this legislation is a positive step towards that end,” Minister Halkitis said.
The minister also spoke about the government’s much touted mortgage relief programme.
The government was told initially that 1,100 mortgagors could be approved through the programme.
However, banks only entertained 422 applications. Of that number 147 were deemed potentially eligible and only six were approved.
Minister Halkitis said the government continues to process appeals.
“To say that we are not satisfied with the outcome would be an understatement,” he said.
“We believed that it was a well thought-out plan which had as a prominent element working with the financial institutions to mutually agree on a plan. We have previously passed an amendment to the stamp act to extend the stamp tax exemption to homeowners who have lost a first home to foreclosure and are now seeking to acquire a second home. We have in committee the pension plans to access those savings to save their home.”
First to contribute to the debate from the Opposition was North Eleuthera MP Theo Neilly.
“While the Bill seeks to protects borrowers in the long run it might end up doing the opposite. Where financial institutions may become more careful and apply more scrutiny. As a result, if there are less loans or mortgages quite naturally there will be less construction thus less money circulating in the economy,” he said.
“So though the Bill seeks to help people, if we are not careful it may cause more harm,” he said.
May 23, 2013
The Bahamas mortgage crisis and the Homeowners Protection Bill in the Bahamian Parliament
The Bahama Journal