The Tribune

EDITOR, The Tribune.

I read with interest two articles appearing in the Business Section of the Nassau Guardian on the December 12, 2012, entitled:

(1) Scotiabank: No Client approved in Mortgage plan.

(2) Banks submit revision to Borrowers Bill.

In the wake of unprecedented foreclosures and repossession of family homes, the Bahamas government has circulated the Borrowers’ Protection Bill for comments.

The Bill would, inter alia, give delinquent home owners an opportunity to save their homes from foreclosure or to delay the foreclosure process.

The courts will be empowered to postpone foreclosures for up to one year and home owners would be free to move between banking institutions at will.

The Banks have raised two concerns namely; the court’s right to interfere with a private contract and the time factor involved in settling matters of this sort. These factors would interfere with the Bank’s profit margin.

The question is, therefore, how did the Banks get in this position? Traditionally, Banks required a deposit of 20 per cent equity before granting a Mortgage. Competition forced the banks to reduce this equity position to 5 per cent or even lower. The result being a proliferation of high risk mortgagors who are now facing foreclosure.

The Government, in an attempt to give relief to delinquent home owners initiated the Mortgage Relief Plan. One article reports that Scotiabank has not approved a single client under the Government’s Mortgage Relief Plan since its inception in early September, yet the Banks are contemplating, “The formation of a specific board to be their voice in the legal forum”.

Are the Banks contemplating a special “Mortgage Court” similar to the “Gun Court”? Who sits on such a board and what is its functions?

Before granting a Mortgage, Banks engage in a vigorous investigation of a potential applicant. This due diligence procedure is equivalent to that of any credit bureau, therefore each bank has it’s own information pool on clients which, if exchanged could serve as a credit bureau.

Perhaps it is time for greater Consumer Protection initiatives as opposed to establishing a Credit Bureau, or introducing a Mortgage Relief Plan. It seems as if the actors are established, the powerful and the powerless. The fight is however not so defined. Of course, the home owners are stuck in the middle.

EDWARD B TURNER

Attorney-at-Law, Nassau,

December 17, 2012.