CIG reveals figures on lost homes
Financial Services Minister Wayne Panton (left) and Finance Minister Marco Archer
(CNS): Over the last seven years just under 200 homes have been taken from families by local retail banks as a result of foreclosures, according to data released by government ministers Friday — a figure that is far less than the thousands some activists were concerned had been taken. But with a surge in repossessions during the first quarter of this year, the finance and financial services ministries have launched a pilot initiative to try and prevent anymore.
Financial Services Minister Wayne Panton revealed Friday that 65 homes were taken by banks in 2013, the highest amount in any year since records were kept. In 2014 the figure fell to 23, more in keeping with the average during the previous years. Concern has been raised again this year, however, as during the first three months of 2015 alone, 17 homes have already been taken by lenders and families forced out.
In an effort to save homes, Panton’s ministry has joined forces with Marco Archer’s team at the Ministry of Finance and Economic Development to create a government-sponsored debt counselling and personal finance management advisory programme, not just to help people budget but to help them negotiate with their lenders.
Panton said he and Archer had been discussing the creation of a personal financial management initiative for some time because of the foreclosures. Launching the programme at a press briefing, he explained that government had recruited six local volunteer financial experts who will present a series of seminars and offer one-on-one counselling by appointment for anyone finding themselves in trouble.
Archer said this would be advice and not direct financial assistance as government cannot pay off people’s mortgages. The goal, he explained, was to help them navigate difficult financial times and save their homes themselves.
Panton said this was to assist people before foreclosure or those on the brink, giving them the right support and advice so they can communicate with the banks and find ways to stop the foreclosures before it’s too late. He said it was about helping people to live on what they earn, “not what they would like to earn”.
The “save the mortgage” programme created under the UDP administration, in which families were given grants to clear arrears, had failed, the minister stated, and the end of that programme in 2013 may have accounted for the high number of home losses that year. Over 80% of the people who were assisted continued to default and went on to lose their homes in the end.
Archer implied that the money, which came from the Dart Group as part of the controversial NRA deal, was more of a bailout for banks carrying the bad debts than it was for the families because they ended up losing the properties anyway.
Both Archer and Panton were unconvinced that the banks, other lenders, valuers and real estate agents were colluding to take people’s homes from them and wipe out the equity investment, despite the experiences of the members of the activist group Caymanians Against Economic Injustice.
Panton stated that the process of foreclose may take three months but the lenders did not reach the point of repossessing homes until the loan holders had defaulted and made no attempt to repay arrears for a much longer period. Nevertheless, he said, government wanted to hear from people who had lost their homes because of concerns over the loss of equity and the need to help families help themselves to stay in their home.
Archer said the experience was traumatic and this government’s aim was not to give handouts to clear debt but to support people with expert advice and show them the possible solutions for debt management. He said most repossessions were as a result of family break-up and other unexpected situations but there were circumstances where people had borrowed too much. Given the right advice, however, homes could be saved, he said, but too many people ignore what is happening until it is too late because of the other challenges, leading to the default and excessive debt.
Urging people to attend the public seminars and meet the councillors, Panton said MLAs were coming across many people struggling to make ends meet. Given the level of representations that all MLAs were seeing, he said it was clear that a lot of people could benefit from the help.
The volunteers were trustworthy and would maintain confidentiality with those they assist on a one on one basis, he stressed, adding that if the demand is there, they would consider a funded formal programme. Volunteers include Andrew Hulse, Lester Hulse, Carol Braggs, Lynne Whittaker, Jennison Nunez and Leonard Ebanks.
The first seminars will be in Bodden Town on Tuesday 11 August and then Saturday 15 August, starting at 7pm. These will be followed by two meetings in George Town on Tuesday 18 August and Saturday 22 August, and then in West Bay on Tuesday 25 August and Saturday 29 August.
Details on how to make an appointment for one-one- counselling will be released shortly and at the seminars. In the interim, Panton encouraged anyone who is in the midst of a foreclosure to contact his ministry or Minister Archer’s office. Those who have already lost their homes are also encouraged to contact them so that they can look at the current patterns of foreclosure and the various circumstances.
Concerned over the allegations of collusion and the undervaluing properties by banks and realtors, Panton said that if this was the case government would act.
Government figures on foreclosures over the last seven years:
2008: 5
2009: 15
2010: 18
2011: 25
2012: 24
2013: 65
2014: 23
2015: 1Q 17
Category: Local News
One hundred and five homes foreclosed in the past 21/2 years. If the average household in these were 4 people, that means 420 Caymanians without a roof over their heads. Life’s lessons are tough.
The truth is, it is much more economically prudent for a Caymanian to rent today than to try to own a house. With rent you get to move whenever things get crappy, to lower rent if you find you cannot afford the rent you are now paying. You can move to a better place when your finances allow, sometimes to a much better place than you can afford to buy. You get to move if the place runs down rather than pay for upkeep on a house that you already cant afford the bank payments on, the landlord is responsible for insurance, furniture replacement, improvements, upkeep etc., When the kids grow up you get to downsize easily. None of this is possible if you are tied to a bank contract that you can no longer afford.
Some will argue that you don’t build equity when renting, however, if you lose your job, or have to take a lower paying job and cant afford the bank payments, the legal fees, closing fees and short sale, eat up all your equity anyway, returning pennies on the dollar.
The banks are NOT your friends, they will beguile you into signing a contract when you are young, that will have you paying them for the next 25 years. As soon as you have paid down for 20 years, and your house needs major repairs, they will gladly lend you the money to do the repairs, at todays rates, for the next 15 years, burning up your equity in the house.
Ten years later, after paying for 30 years, you will find that your earning power has diminished, you miss 3 or 4 payments and the bank sells your house at auction below what they, and an appraiser, told you it was worth.
You do the arithmetic and find that for the past 30 years, you have paid the bank 3 times what the house is worth on the market. Instead of building equity, you have overpaid for a house you no longer own.
Owning your own house made a lot of sense, years ago, when Caymanians saved enough to buy a piece of land, or inherited it, then built their house, a few blocks at a time, while renting, until it got up to the belting, then borrowed enough money to finish closing up the house and move in, thereby maintaining positive equity.
If you aspire to own your own house, this model still makes sense.
Government should ease some of the CPA restrictions to allow young people to build over a longer period of time as well as to occupy a part of a house while the remainder is completed…………..if they want to really help young Caymanians own their own homes.
Do you know that people actually believe the stuff you say ?
A lot of people feel that a home loan is their right and that they don’t have to pay it back because the banks make all that money
There used to be certain guidelines to the amount you could borrow. A single person could borrow up to 3 times their salary and a couple could borrow 3 times the highest earner and 1 time the lower.
People do need to live within their means, I understand the unexpected happens and sympathize there, but a lot of times the mortgage is not being paid but there are 2 or 3 big new SUV’s parked in the drive.
How about this, in a tax free country where banks are making an incredible profit they are charging too much interest. 3% over prime for what ? I argued on my loan of 175,000 to be paid off in 14 years at 2300 per month why so high? It didn’t start that way. It started at 1100 per month when wife worked at bank at staff rate. She and another staff member succeeded in saviing ins. co by 6 million dollars had to ask for raise and was offered 300 per month. Went to competing co. and got 2000 raise and a promotion plus a car and gas. By the way we are Caymanian. The bank instantly doubled the mort . to 2300 per month. Then Iven happened, got paid half by insurance co. (replacement cost) .Then a recession happened one divorce. Then new wife rest closes lose 3000 per month income. Lose mercedes after 2 month .All new rest want to pay experienced cook $8 per hour. Then rent rooms to keep from losing house. Then TI drops price of suites to all inclusive ( elect ,water, TV,internet).rooms go empty . Still paying bank and amount due is 121,000 HOW? Insurance for house triples? Still? From 1993 shouldn’t bank lower interest rate. Shouldn’t they do their part to help keep the socio-economics of the country? Be the good corporate citizen? NO JUST profit
You would probably have benefitted from some free advice to make sure everything was understood, something that’s currently lacking in Cayman. A mortgage at 6.25pct for 175k over 14 years should be no more than 1600/month, at 3.25pct (likely staff rate) the payments would be 1300/month, The timelines suggest a 14 year mortgage should be nearly paid off by now (pre Ivan start) so I would be questioning how you still owe 121k on a 175k loan. btw I earn more than 3k/month and would never think I had enough for a Merc, car loans are for suckers, you only ever rent a car if you borrow. Borrow 50k, pay 70k back over 5 years for something that might be worth 15k at the end of it, not good economics.
Oh nooooooooooo! Not the Mercedes! Life is over now……..
Every committee member should be obligated to attend all the seminars and ensure anyone they know with a foreclosed home attends. I have a feeling the seminars and one-on-ones will have a very low participation rate. However, if they were getting free cash, thousands would show up.
This problem wouldn’t exist if people built houses that they needed and could afford. Most of these houses are 10 times or more larger than they need. Some houses four, six or more bedrooms with one occupant. Some mortgages two and three times more than what the house would fetch on the marked when offered for sale. They see a neighbour build a 3,000 sq ft house so they build theirs 6,000 sq ft just to outdo their neighbour. Then comes the UDP like Santa Claus giving away government hard paid / earned taxpayers money to selected supporters to buy votes. The save the mortgage scheme just made these people more dependent as they lost interest in making payments and expected government to continue to step in, over and over again and bring them up to date which would have happened had Mckeeva won the elections. In short never hang your hat higher than you can reach .
There are no doubt muliple reasons here. Some feel entitled to what they cannot afford, some can barely afford at time of loan agreement (then have children – without considering the costs), some face divorce, some employment change, some face health or other unforseen costs….and other causes. Much of this is compounded by poor parenting messages and political grand standing which does little to nothing to instill values to not hang ones hat higher than can be reached. Another poster made an excellent point….”Govt. Affordable Homes” are on individual property lots (with associated higher costs to purchase and maintain) when they should be biult as apartments.
I had a larger house some years ago (on it’s own individual property). My circumstances changed, I contacted my bank right away and made arrangements to sell. Sold for somewhat less than the value (because I value my financial reputation, and don;t expect others to bail me out) bought a smaller condo (with associated lower purchase and maintenance costs) and paid off for it some years ago now. Both of the local banks that I deal with have offered new loans….I said thanks but No! Moral of this post is; while some fall on hard times….others set themselves up for such falls. Live and learn (which includes making the neccessary adjustments!)
Everyone loves to blame the banks…if you cannot afford a mortgage, dont apply, even if they are willing to give it…remember how the global meltdown started??? Both parties have a responsibility, one is to lend only to people who can afford it, the other is not to borrow if you cannot afford it. Its simple…
Let me explain: The banks will not lend you money if you can not afford it. The problem starts when people are fired or get sick. Since their is no social security in this country, because of the fear of “socialism”, people are getting behind on their payments and have no more healthcare etc etc.
I thought that’s what insurance was for? If you take on a large financial commitment you should plan on the possibility that you are not well enough to work, or getting fired, after all a mortgage is usually 15 or 20 years, in my job right now I would take knowing what’ll happen in 6 months.
Please also bear in mind that some bank loan officers gives mortgages to people who really do not fairly qualify. I know someone who got a mortgage to build a house and within a few years had to vacate , rent it out and move in with friends. I know that she was not making enough money from her job to be able to qualify for the mortgage but at least she is doing everything she can to hold on to her house. Sometimes it depends on who you know and not how much salary you are making to get a mortgage so eventually it all falls apart. However the banks should really try to get a reasonable sale for the house so that the owner will get some equity out of the house and not just sell it far less less than the value. Also McKeeva’s ,” save your mortgage” only prolonged the problem. It is horrible to lose one’s house like like that and I believe both the bank loan officers as well as the prospective owner could benefit from the initiative being set up by the ‘Ministry of Finance.
At least McKeeva saw the problem from then and tried to do something! What has this govt done since to help?
And just what exactly was it that MacDaddy did? Oh that’s right, no one knows because as usual it was all done under the table with no oversight or process. Caymankind at is ugliest.
If you are saying that this govt does everything openly and nothing behind closed doors, then you are delusional or are a PPM zombie. If you only knew.
Nowhere in that post does it refer to or imply that. So guess that makes you the delusional political party zombie. Thanks for sharing.
It is not any governments responsibility to pay your mortgage anymore than it is to help you get dressed in the morning, although I feel that will be demanded before long.
This is not correct. Loan officers have to get approval from management for all approved mortgages and their debt service ratio has to be below 45% unless they have a high income which would usually makes them less likely to default. I am willing to bet, however, that a majority of these homes were repossessed through the government guarantee assisted mortgage scheme which set people up who could not afford to live in these houses to fail.
Also why are government building houses, taking up so much land and giving low income tenants yards to take care of etc? Build apartment building, taking up less space, they are more efficient, cheaper to construct and pay a single person a maintenance contract to take care of them.
But what do I know? I am just a construction contractor who also has 6 years lending experience.
Government figures cannot be relied on. PPM is once again out of touch with reality
And it’s funny how this govt is only reactive instead of proactive. If this issue had not been bought up over and over again in social media they would never have addressed it. Shame on them!
The Government figures are based on actual reports from the banks. SInce you say they cannot be relied on what do you say the “real” figures are and prove their reliability. If you cannot do the latter then your comments are the usual political BS.
Ezzard is the reliable source and he says thousands of houses repossessed
And they are not speedy either. It takes a long time between a property owner first defaulting and any property being sold. This unfortunately has an overtone of entitlement in relation to some borrowers. They agreed that if they defaulted their property could be sold. As long as that is done fairly, what is the problem? Making it a problem now will only raise the cost of borrowing for those who do meet their obligations!
So not 3000 then?
https://caymannewsservice.com/2015/07/speedy-foreclosures-rob-owners-of-equity/
I am also sure the sales price being low was also an exaggeration. You would expect news journalists to verify facts before reporting garbage