The Tribune

EVERY bank and financial institution has them – loans that go bad. Monies lent with the best of intention to customers who have the best of intentions of repaying the funds borrowed to build or buy their dream home or grow their business. But when something goes wrong and they can’t honour the debt as they once did and the months and back due payments pile up to a point where they seem insurmountable, it is only a matter of time until the end is near. The lender comes along, takes the borrower to court, takes possession and boots them out.

It’s a process no one wants to see happen but it happens far more frequently than we realise. Want to know just how often and how many repossessed properties there are in The Bahamas? Just look up distressed properties on any bank’s website. One bank in particular does an exceptionally good job listing every vacant lot, single family home, commercial property, Grand Bahama and Family Island properties with geographical, site and physical descriptions along with pricing. There are more than ten pages of listings. Another bank has fewer distressed properties but generally higher in value. The listings of distressed properties on yet another bank’s website reflects risks of some neighbourhoods that seem to pop up most frequently.

Property repossession is so common that just about every financial institution has a department or at least an individual assigned to it, even if they give it a fancier name. And there are real estate professionals who specialize in distressed property transactions. Of course, there are also smart investors with deep enough pockets to snatch what appears on a distressed property list quickly if it has potential and the price is right. Sometimes the lender has too much money in the game to make it worth a look.

The precursor to repossession is usually a soft approach. Banks and other lenders tend to go to extremes to work with those falling behind, accepting partial payments trickling in, hoping the customer will catch up. But patience is not always rewarded and by the time a single-family residence is repossessed the story around it is pretty predictable. The same owner who could not make payments also could not afford the costs of repair and upkeep. So by the time the lender gets to court, the judge signs off on the right to repossess, the homeowner is served and due process takes place, the property in the middle of the tug-of-rights can be in a state of shambles.

And that’s what the neighbourhood inherits. It's the side of things we don’t often think about when our sympathies go to the family who lost their home. It’s natural to feel more empathy for a family that lost its home than for a bank that lost a few bucks.

It’s this other side of what happens to the unintentional bystander victims of repossession that gets far too little attention. What happens to the house next door, across the street, what happens to the community? The lending institution takes ownership but not pride of ownership. They want to dump the property that turned out to be a bad deal. If you want to see how many there are, check out the bank websites noted above. Nearly every bank in The Bahamas has lists of distressed properties and distressed is the right word for most of them. And it is not just banks. Insurance companies, credit unions, other financiers all count on an individual’s or a company’s ability to pay back and all without fail have encountered the customer who at some point cannot or does not.

So strewn throughout New Providence, Andros, Abaco, Exuma and nowhere more so than in Grand Bahama are distressed properties owned by a bank or lender, properties left to fester with overgrown weeds, peeling paint, fallen down gutters, tree limbs stretching across others’ yards. Pools become cesspits of mosquito larvae since there is no electricity to operate a pump. At night, there are no lights, making the abandoned property an open invitation for the homeless grateful for a roof over their heads and not the least concerned about rodents or who holds the title.

Where banks win in court but fail to maintain the property awarded to them by showing a sense of responsibility, communities lose. Do they simply stick the result of a bad loan on a list and go about their business as if they are done? In one case in Dannotage Estates, a kind neighbour feeds the cats left behind and helps to keep the bushes trimmed. In another on Eastern Road, neighbours rake masses of leaves that pack the narrow street from overhanging untrimmed trees while everyone loads up on bug spray because of the nearly empty pool filled with dangerous, green algae water. In many areas, abandoned buildings become hideaways and havens for drug dealers, rapists and other nefarious actors. In one case of a house that caught on fire several years ago across from a primary school, police have been notified of young girls being pulled inside and attacked. Some lender holds papers to that property, but who owns the responsibility to make it safe?

There are no winners when it comes to bad loans.

But a note to all who lend – please stop the practice making the neighbour and the surrounding community the loser. If you take possession, you must take responsibility.

In the end, the offer you get for the property you want to sell will be higher. In the meantime, we will have safer, sounder communities.