The Tribune

By NATARIO McKENZIE

Tribune Staff Reporter

nmckenzie@tribunemedia.net

THE proposed Homeowners Protection Bill will create a “level playing field” between borrowers and lenders, a Cabinet Minister yesterday asserting that the legislation represented the “modernisation” of the Bahamas lending framework.

Speaking on the proposed legislation in Parliament yesterday, Mr Halkitis said the Bill was designed to assist individual home owners at risk of losing their home due to extraordinary circumstances such as chronic illness, unemployment or underemployment due to the recession.

“The measures in this Bill are part of package of measures designed to assist homeowners facing these extraordinary circumstances, and have been benchmarked against standards in other jurisdictions,” Mr Halkitis said.

“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.”

Mr Halkitis said the Bill seeks to prohibit excessive salary deductions through regulations, noting that the Government intended to move quickly to pass those regulations.

Outlining several provisions of the Bill, Mr Halkitis noted that Clause 4 outlines the conditions under which a court may provide relief to borrowers.

“More specifically,” said Mr Halkitis, “it provides conditions and timelines for action by the lender with respect to foreclosure. The court may grant relief from the consequences of a breach of a loan covenant where the borrower remedies the breach by paying all the arrears due under the mortgage, with lawful costs and charges.”

Mr Halkitis added that the Bill provides that no court proceedings be started unless the borrower has been served with at least 30 days notice, detailing the nature of the breach, the amount of principal and interest in which the borrower is in default, and the amount of any administrative fees owed.

Under the Bill’s terms, a borrower may obtain free of charge - at least twice per year - a statement of their account showing the amount of principal, interest and other charges outstanding. Penalties will apply for any lender who charges a fee for such a statement.

Mr Halkitis said Clause 5 of the Bill enables a court to give a residential mortgage borrower time to remedy his default where a bank is seeking possession if, in the opinion of the court, the borrower is able to remedy his breach within a reasonable period.

This clause empowers the court to adjourn the proceedings, and stay, postpone or suspend execution of a judgment or delivery of possession.

“Clause 6 allows a court to consider any payments made by the mortgagor in advance of being due when action is made against him for an order of possession or foreclosure,” Mr Halkitis said.

“Clause seven makes provision for mortgagees to provide a reasonable period for persons who obtain mortgages for dwelling homes to make arrangements for payments of arrears before exercising the power of sale.”

“Clause eight provides an exemption of Stamp Duty for a mortgage when exercising the power of sale within five years of the initial mortgage.

“Clause nine enables persons wishing to purchase premises to retain counsel and attorney, appraiser and an insurance company of their own choice when obtaining a mortgage.

“Clause 10 seeks to provide for the transfer of mortgages between financial institutions at no cost for the mortgagor other than any additional duty that becomes payable by reason of the assignment or transfer.”

The Bill would also give lenders the option to sell after one year from the date of giving notice of default to the borrower or obtaining possession if no objection to the sale is received from the latter.

“If the mortgagee (lender) sells the property for less than the sums owing, it cannot recover the additional sums from the mortgagor. Any surplus amounts must be given to the mortgagor (borrower),” said Mr Halkitis.