The Tribune

By NATARIO McKENZIE

Tribune Business Reporter

nmckenzie@tribunemedia.net

JAMAICA - The Bahamas’ high number of delinquent residential mortgages is a “huge concern” for both the Government and commercial banking industry, with CIBC FirstCaribbean’s top regional executive predicting that a revised Mortgage Relief Plan could be unveiled in a few weeks.

In an interview with Tribune Business at the bank’s third annual infrastructure conference in Montego Bay, Rik Parkhill said: “It’s obviously a huge concern for the Government and for us in terms of just the number of non-performing residential mortgages.

“We have been having a dialogue with the Government and other commercial banks to try and develop a proposal that gets the Government to where they want to go, and helps us with our non-performing mortgages in the Bahamas, while keeping as many people in their homes as possible for as long as possible.”

Mr Parkhill added: “I think we share a mutual goal. What the proposal looks like, I think that will see the full light of day in perhaps a couple of weeks.”

Prime Minister Perry Christie last week said his government was still committed to developing a Mortgage Relief Plan despite its previous failure, revealing he had received a communication from one commercial bank that takes the initiative to an unspecified “major stage”.

Mr Christie told MPs that he would reveal more when closing the 204-2015 Budget debate on Thursday, but that never happened as the debate was brought to an early close.

When the PLP’s first Mortgage Relief Plan was introduced in September 2012, there were an estimated 4,000 homeowners in arrears. Some $10 million was allocated for the plan, and 1,000 were estimated as qualifying for assistance.

It was later admitted that just four or five homeowners had benefited.

“In previous interventions, I have indicated that the Government remains very much focused on a Mortgage Relief programme which turned out to be more complicated than both the banks and ourselves imagined,” Mr Christie said last week.

Dionisio D’Aguilar, the former Bahamas Chamber of Commerce president, told Tribune Business earlier this month that the Mortgage Relief Plan was “the most asinine policy I have ever heard”.

He argued that the Government’s plan to reinvigorating the housing market, and deal with the non-performing mortgage crisis, would cause the commercial banks to “completely shut down” on new lending.

Mr D’Aguilar said the Christie administration’s focus should instead be working with the banks to develop a viable scheme for getting the current $700 million worth of non-performing mortgages off their balance sheets, so liquidity for new loans could be freed up.

Meanwhile, Franklyn Wilson, the Arawak Homes chairman, who is leading negotiations on the Government’s behalf with the commercial banks over a revised Mortgage Relief Plan, said both sides “recognise it’s in the national interest” to solve the problem.

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.

This threatens to act as a continual ‘drag’ on the economy, and impediment to growth by deterring new lending.