The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

A leading businessman yesterday urged critics to “stop harping on” about the Government’s failure to-date to deliver a viable Mortgage Relief Plan, arguing that several of its key objectives had already been achieved.

Franklyn Wilson, the Arawak Homes chairman, told Tribune Business that “the end result” rather than how it was achieved was the only thing that mattered.

The businessman, who is leading negotiations on the Government’s behalf with the commercial banks over a revised Mortgage Relief Plan, said a major goal already been accomplished - that of “hundreds” of Bahamians remaining in their homes despite being months behind on their mortgages.

Urging Mortgage Relief critics to “focus” on this outcome rather than the process by which it was achieved, Mr Wilson did not dispute Tribune Business’s assessment that it could take the banking industry another decade to clear its $1.2 billion pile of ‘bad’ loans.

With this situation threatening to act as a continual ‘drag’ on the economy, and impediment to growth by deterring new lending, Mr Wilson said both the Government and banks “recognise it’s in the national interest” to solve the problem.

He declined, though, to comment on suggestions reaching Tribune Business that the Government is now exploring a solution that would involve taking some of the non-performing loans off the banking industry’s balance sheet.

This would be similar to the Bahamas Resolve transaction employed to rescue Bank of the Bahamas, although any ‘solution’ for the wider commercial banking industry is unlikely to involve taxpayer monies or liability.

Speaking to the Mortgage Relief issue, Mr Wilson told Tribune Business: “The efforts are continuing. I can confirm that the matter has the attention of the banks at a very high level.

“This is not a simple issue; it’s a complex matter. The magnitude involved is not simple, and the numbers are such that it requires the approval of the banks at a very high level.

“The banks are showing willingness to co-operate, and the Government has demonstrated it is prepared to make it happen. I am satisfied that this is a genuine effort to do something very, very significant.”

Mr Wilson declined to divulge the details of discussions between the Government and the banks, instead urging Mortgage Relief Plan critics to focus on the outcome and not the process.

“There are literally hundreds of Bahamians living in homes where their mortgages are months in arrears,” Mr Wilson said.

“Those who keep criticising this Mortgage Relief Plan ought to recognise that the process itself may not have the exact formula anyone contemplated, but the outcome is better than anyone could have dreamt and has exceeded the reasonable expectations of many.

“There are literally hundreds of Bahamians living in homes despite the fact their mortgages are very substantially in arrears. When people keep talking about mortgage relief, mortgage relief was intended to keep Bahamians in their homes,” the Arawak Homes chairman added.

“For a variety of reasons, public policy does not always follow the path envisaged, but achieves the intended outcome. From that perspective, what was hoped for from the Plan has been achieved.”

Mr Wilson added that interest rates associated with mortgages had fallen to “record lows”, making home ownership even more affordable for Bahamians able to qualify.

His explanation, though, is unlikely to ‘cut much ice’ with the political Opposition and critics, who have consistently blasted the Christie administration for its failure to produce a workable Mortgage Relief Plan - something that was one of its main campaign promises during the 2012 general election.

The fact many defaulting borrowers have remained in their homes is more a reflection of housing/mortgage market conditions, and may have happened in spite of - not because of - government efforts such as Mortgage Relief and the Homeowners Protection Bill.

With few new borrowers qualifying for mortgage loans, Bahamian commercial banks simply do not have any available buyers to take over the hundreds of distressed properties on their books.

And, given that properties deteriorate when they are unoccupied, the banks have decided to let defaulting clients stay in their homes - sometimes for as long as five years.

The Government’s first Mortgage Relief Plan, billed as helping 1,000 troubled borrowers, flopped as it ended up helping less than 10. The Christie administration attempted to blame the failure on the banks, suggesting they did not understand how indebted their borrowers were.

Prime Minister Perry Christie used his Budget address to give a vague statement to the effect that the Government and commercial banks were still in talks attempting to come up with a viable Mortgage Relief Plan beneficial to all parties.

No timetable was offered, and Mr Christie was careful to balance the ‘pros and cons’ and concerns of all parties in his comments, so as not to offend anyone.

When asked whether the Government was now discussing a ‘Bahamas Resolve’ type solution with the banks, Mr Wilson responded by saying the Prime Minister was giving the talks “his very best shot”.

The Arawak Homes chairman then described as “a fair statement” Tribune Business’s estimate that it might take a decade for the banking industry to ‘sort out’ its non-performing loan pile.

“This is why this is a case for public policy intervention,” Mr Wilson told Tribune Business. “This is why this has the attention at such a high level in government and the banking industry. Both sides recognise it’s in the national interest.

“All I know is that the magnitude of the problem is real.... The end result is the objective. Let’s stay focused on the objective: Keeping Bahamians in their homes, and for the banks to be in a position where they can stimulate new economic development by extending mortgages.

“The fact of the matter is both these things are happening in a way that no one could have predicted. Let’s not keep harping on about Mortgage Relief.”