The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Bahamian commercial banks are seeking out only “the creme de la creme of the mortgage market” as home buyers endure increasingly long waits for financing approval, it was disclosed yesterday.

Kenrick Brathwaite, the Clearing Banks Association’s chairman, told Tribune Business that COVID-19 and its devastating impact on the jobs market and wider economy had merely added to the existing risks for the industry when it came to mortgage lending.

Acknowledging that banks had become “more cautious” in what was already largely a risk averse environment, he cited the Homeowners Protection Act as creating a disincentive for the industry and other lenders to extend mortgage credit to those other than only the most qualified borrowers.

“In a lot of cases banks are waiting to see what happens with the economy,” Mr Brathwaite said. “Obviously the Government sector is still intact and certain businesses are still intact, such as the banks, insurance companies and financial services, but the big gap is the hotel industry where an entire market has gone. That’s a big wait and see.

“The Homeowners Protection Act, that in and of itself has created additional checks and adjustments to what we call acceptable risk. Some properties are no longer acceptable risks. With the Homeowners Protection Act, banks want to make sure they get the creme de la creme of the mortgage market.”

While the Act, passed by the former Christie administration, may have created greater protection for delinquent borrowers against foreclosure and being evicted from their own homes, it has adverse consequences for the banking industry’s willingness to extent fresh mortgage loans when memories of the fall-out from the 2008-2009n recession remain fresh.

Mr Brathwaite said the insertion of the courts into the foreclosure process and/or banks exercising their “power of sale” under the mortgage agreement had complicated efforts to secure collateral, making the process “cumbersome and long drawn out”. In addition, distressed properties cannot be sole by banks to buyers who either work for them or have family connections.

“I wouldn’t say anything special is going on,” the Clearing Banks chief said in relation to mortgage approval waits. “It’s things that are happening in the economy that are slowing down the mortgage process where people will be a little more cautious to lend than they were four to five weeks ago.”

He spoke after Gino Maycock, a Colonial Realty broker/appraiser, told Tribune Business that residential real estate transactions in the domestic market were being delayed or falling through by waits of up to six-seven months for buyers to learn whether they have mortgage approval.

“The lenders are still the ones that are just holding back on the ability for buyers to secure the financing and close the deal,” Mr Maycock said. “We still have that situation and really it seems to be getting worse, truth be told. I think the Government needs to step in and get the banks to be more up front with buyers and tell them if they don’t qualify.

“They’re being really tough on the financing.... For some strange reason they are slow on the response to confirm whether a client can borrow for a home or some real estate. It goes beyond me; we’re all feeling the pinch. It has taken four to five months, six to seven months, to get a ‘yes’ or a ‘no’ and it’s still going on, still happening.”