Speedy foreclosures rob owners of equity

(CNS): A group of concerned citizens, many of whom have lost their homes, have come together to raise awareness of what they see as a collusion between realtors, valuers and banks over speedy foreclosures that rob owners of tens of thousands of dollars in equity after just three months of arrears. Members told CNS that as many as 3,000 local properties have been taken by banks in the last three years, but given the shocking speed and ruthless way homes are being auctioned to cover loans with no regard for house values, they say government must now intervene.

As well as the obvious direct loss to homeless families of their house, their equity investment and the consequences of that, the burden will fall increasingly on government to help these people who have now become impoverished because of the over-zealous action of local banks. In addition, the fire sale of many properties is reducing the value of the homes nationwide as foreclosure valuations are absurdly distorted.

Sick woman faces imminent eviction

Following the publication of this news article today, the members of CAEI called CNS to report that a local woman living in Savannah Meadows had received a writ of possession from lawyers Thursday demanding she leave the property immediately despite a stay filed with the courts and hearing set for 24 July. The woman, who is in her sixties and suffering from significant medical problems, is about to be made homeless and has nowhere to go. Campaigners are urging anyone who can assist in helping her remain in her home, at least until the court hearing, is asked to contact the group via their Facebook page (see link below) or call directly on 929-5600.

While people described home loans in Cayman as mortgages, they are in fact demand loans. As a result, the law allows banks to seize homes from families regardless of their circumstances or previous good standing after just three missed payments. The story told by the members of the group about their own circumstances and the others they are trying to help were surprisingly similar.

Most had significant equity and had properties with up-to-date values from the banks that had dictated their costly insurance premiums. But with no negotiation or effort to get the homeowners passed their difficulties, banks are taking properties and listing them for auction literally under the noses of the homeowners within 90 days with price tags that are encouraging a cut throat approach by realtors.

The fledgling group, which is called Caymanians Against Economic Injustice, is lobbying government to address the existing foreclosure legislation and examine the entire regime regarding what they see as a developing scam between the surveyors and valuers, real estate agents and the banks.

While the US government and other western administrations had stepped in with legislation to prevent speedy foreclosure against people caught up in the world economic recession, it appears the rules in Cayman have been adjusted to make it even quicker and easier for banks to take loan holders who miss just three payments immediately to court and list the property for sale.

The newly formed committee has more than a dozen active members and is reaching out to others whose homes are in jeopardy to join the campaign to press government to act. All of them said that their homes were taken after around 100 days, and regardless of the equity or genuine value of the property, the banks significantly undervalued their homes, selling them in many cases for half their worth to recover just loan value only.

The group includes a cross-section of people, including educated, qualified and experienced local professionals, businessmen and former political candidates, all of whom have held prominent positions in the community or served on local boards. The common cause of their difficulties was divorce, sudden serious illness or job loss, leaving them struggling to meet hefty loan and insurance payments for what could have been a temporary financial problem but what became a catastrophe.

Regardless of their previous good standing and history of payments on a home loan, banks are issuing demand letters and moving to foreclose on properties at the 90 day mark, literally forcing families, single mothers, elderly and infirm homeowners onto the street.

Local locksmiths have reported changing locks on foreclosed homes on a daily basis and the court lists are filled with suits from all the high street banks against homeowners. The banks, it seems, are working with real estate agents and listing properties ready for foreclosure auctions after valuers have given ridiculously low values for a reserve price. But the low price tags in most cases match the exact amount of the loan against the home, disregarding the real value of both the house and the land they are on.

In some case people who once had hundreds of thousands of dollars of equity in their property are now destitute, indebted to banks, penniless and homeless.

One prominent community leader, who suffered a bout of serious illness and lost his home as a result, explained that despite being valued by his bank at over $550,000 for the insurance on his loan, his home was auctioned for less than $380,000. He said that was about the value of the land on which the property stood. “The bank sold my land at auction and threw in my house for free,” he said, as he illustrated the ruthless nature of the foreclosures.

He is not alone. The committee related dozens of cases, including their own, where they are trying to help and learn from their own experiences to save homes in the face of the mounting numbers and the lack of action by government.

Although all of them have talked with their various representatives about their own and other cases, they told CNS that the politicians seemed overwhelmed and unsure how to help, as they all appear to have had dozens of representations from constituents regarding families losing their homes.

Taking the first steps towards starting a national discussion about how the issue and other barriers to the economic development of local people can be addressed, the group wants to see sensible legislation to protect homeowners and the value of local property.

Members of CAEI are urging anyone who has lost their home or whose home is currently in jeopardy to contact their group via email

CAEI345@outlook.com

or through the Facebook page