The Tribune

By NATARIO McKENZIE

Tribune Business Reporter

nmckenzie@tribunemedia.net

THE Bahamas Mortgage Corporation (BMC) will need an injection of $40-$50 million ‘in the near future’ to maintain its financial viability according to former Mortgage Corporation Chairman Dr Duane Sands.

Dr Sands told Tribune Business: “When I demitted office there were 1,100 or so diligent mortgages. The overwhelming majority of those mortgages have been delinquent for more than 500 days and so when you look at those residual mortgages that had not been restructured, the reason why they had not been restructured is because they couldn’t be restructured or  because  many of the individuals had not presented themselves to have them restructured or they simply did not have the means to service the debt. Many of those loans were placed on the books between 2002 and 2007. As such, I think we need to acknowledge the complicity of governmental agencies of putting people and families in such financial straits to the point that they could not service a debt that they had agreed to service.”

Dr Sands had called the government’s allocation of $10 million to its Mortgage Relief Plan a ‘drop in the bucket’ and said the Mortgage Corporation alone would need a $40-$50 million injection to maintain its financial viability. State Minister for Finance Michael Halkitis told Tribune Business that the government was looking to assist around  1,500 people through its Mortgage Relief Plan, roughly 300 of which he said would be clients of the BMC. Halkitis said that funding for the principal payment for the Bahamas Mortgage Corporation (BMC) clients would come for a different source of funding, as opposed to the source of funding for clients of private financial institutions, so there would be a ‘level playing field’ between BMC clients and private financial institutions.

“When we look at the sinking fund deficit and the anticipated financial commitment of the Bahamas Mortgage Corporation’s $10 million for the entire country it’s not going to do anything to salvage the financial viability of the Mortgage Corporation. As a matter of fact the Mortgage Corporation alone will need on the order of $40-$50 million in the near future to maintain its financial viability,” said Dr Sands.

Dr Sands added: “Bear in mind as it relates to the BMC, the government of the Bahamas and by extension the people of the Bahamas are the guarantors of that debt. When we have a sinking fund deficit of more than $80 million and that does not include the interest payments due, that money has to come from somewhere particularly given the fact that there is a 36-37 per cent delinquency rate that doesn’t allow for enough to cover much more than operations and some debt servicing.”