The Tribune

By DANA SMITH

Tribune Staff Reporter

dsmith@tribunemedia.net

DIVORCE and separations are a "major contributing factor" to the high number of mortgage delinquencies in the country, according to one top banking official.

In announcing the start of government's Mortgage Relief Plan at RBC Headquarters yesterday, Clearing Banks Association chairman Nathaniel Beneby said yesterday over 4,000 mortgage accounts are currently in arrears.

Mr Beneby, who is also head of personal banking at RBC, dubbed it a "crisis" and attributed the high number to several reasons.

"The global economic recession has had an adverse impact on many families. Between 2007 and 2011 the economic recession was severe and there were very difficult years for many Bahamian families," he said.

"The country experienced high unemployment and many persons were caught financially over-extended. Divorce and separations are also a significant factor attributing to the high mortgage delinquencies."

Mr Beneby explained further: "When you move away from two incomes qualifying and servicing an obligation and now there is only one income, you can see the challenge there."

For example, he said, a husband and wife would have applied and then qualified for a mortgage based on their two combined salaries.

"(Then) they divorced (or) separated, both walked away, neither party wants to honour the obligation or even if they would wish to honour the obligation – their single income alone cannot afford to meet the mortgage payment," he said.

"Really in those situations, it's usually best that they could agree to endeavour to work together to sell the home and any residual amount from the sale it could be used to be shared and then persons could start over.

"Or it may be a case where nothing is left from the sale and mortgagors would have to rent temporarily until they are able to get back on their feet and then afford a home again. So that is a challenge for a number of families in terms of saving their homes in the country today."

He also spoke on the difficulties banks face when trying to aid a divorced or separated couple in continuing to pay their mortgage.

"How do you get those two persons to work together and collaborate?" he asked. "Because those separations are usually bitter and really – not speaking to one another and how do you truly get them to work together for a common good. It's very, very challenging but it is a significant part of the reason we are seeing increase defaults in mortgages."

The government's Mortgage Relief Plan takes effect next Monday, September 10 and banks will continue to take applications from persons until the plan ends on March 10, 2013.

Mr Beneby said the CBA estimates approximately 800 to 1,000 persons could benefit from the plan.