Activists want solutions not handouts
(CNS): A group of local activists that are organising themselves into an advocacy group for Caymanians losing homes and jobs in the face of continuing economic uncertainty say that they want solutions to their problems not cash handouts. Caymanians Against Economic Injustice (CAEI) welcomed government’s move to offer advisory debt management clinics and to help people talk with the banks but they said the majority of their members, the people they are trying to help and the issues they are tackling have very little to do with people carelessly spending beyond their means.
At a recent meeting of the group, members highlighted what they believe are the fundamental causes of the growth in foreclosures, as they pointed to systems that are working against people who hit hard times, even temporary difficulties as a result of, for example, family splits, job losses or illness.
They continue to dispute the figures revealed recently by government that point to just 200 homes being foreclosed in Cayman over the last seven years, indicating that their own research among realtors and local attorneys handling cases where homes are in jeopardy has found that the number is already in the hundreds for this year alone. Local online classified services now have categories selling foreclosed homes and a cursory glance at some of the local real estate websites suggests that foreclosures appear to be significantly higher than the official government figures.
A spokesperson for the groups said the situation is far worse than government wants to admit but they all agree cash handouts from the public purse are not the solution. Firmly believing the system is working against locals at present, the spokesperson said people need help to navigate that system or legislation that can help protect people from what are increasingly rapid foreclosures and has suggested that access to pension funds or placing debts in separate accounts are some of the ways homes could be saved.
“If people can use pensions to buy or build a home it makes sense to also allow limited access the funds to save homes,” she said, as she warned that if local people become homeless they will fall into the hands of the state.
A recent foreclosure of a home of a woman in Savannah as a result of her ongoing illness saw government immediately foot the bill for her accommodation in East End, demonstrating that while banks are selling off property and disregarding the equity in them, the problems continue to undermine the local economy and puts pressure on the public purse – exactly what the activists say is the problem with handouts versus solutions.
Government is planning on a series of advisory seminars and has recruited several ex-bankers and finance experts to offer debt management and counselling for people in financial trouble. However, the group believes that government is misunderstanding the real problem.
“There are certainly people who live beyond their means and have little regard for debt but that is the exception rather than the rule,” the spokesperson added, noting that virtually all of the growing members of CAEI are in trouble as a direct result of circumstance beyond their control, rather than extravagant lifestyles.
Category: development, Local News
Here’s a solution, how about banks just stop offering mortgages then they don’t have to worry about foreclosing. People will just have to save up and by a house in cash and then no one can take it.. Sheeze people act like they are doing the bank a favor..
Then Banks shut Down nd you go home no job! U like that? Without us customers, there’s no business and no job for you!
Economic growth is the solution.
They want handouts.
This crowd have already been completely discredited as an advocacy group by their ridiculous claim of 3,000 repossessions. Why the media is still giving them a forum for their whinging is beyond me. Deliberate misinformation like this is part of the problem, not the solution.
A review of the “local online classifieds” shows 4 listings under foreclosures on Ecay. This is out of 1,281 listings. While some of the 1,281 are duplicates or not actual listings likely less than 1% of the properties listed on Ecay are openly identified as foreclosures.
and one is not a broker so may not really be a foreclosure….and….0% listed at hundreds of thousands below market value.
Pathetic whingers.
Go back to school.
I did very well at school thank you – that is how I can afford my mortgage with ease.
Then you should be educated and intelligent enough to have compassion for the less fortunate.
Education does not guarantee compassion in some cases the more you educate a fool, the more ignorant he/she becomes. All I know is, when another hurricane the magnitude of Ivan hits us we will have no worries about seeing these educated fools for a while, they will leave and only return once we are “civilized” again. “I did very well at school thank you, that’s why I can afford my mortgage with ease”. LOL Ignorance is bliss!
You mean the less Capable of you know of making sound financial decisions.
No idiot. I mean the less fortunate.
Jeez, you really do need to go back to school.
Property ownership is a privilege not a right.
Another issue which must be included in the equation is the quality of ” risk assessment ” by loan officers approving mortgages, or indeed any loan. How diligent are they in determining whether a newly married couple really can sustain their mortgage repayment plan.
The major retail banks have frequently tried to show that they are good ” corporate citizens ” by offering ludicrous credit facilities, for example, for the purchase of new cars. 100% loans for the cost of the car, repayable over 3, or even 5 years, plus the cost of the first year’s registration fee, and first year’s insurance premium. Total, bearing in mind the insurance has to be fully comprehensive, and the likely borrower is under 25 – conservatively, $25,000. What happens the minute the happy new owner turns the key in the ignition of his gleaming new Honda/Toyota/Kia whatever – it’s value drops at least 15%, and continues to drop annually. He now has an asset whose resale value will never cover the amount he originally borrowed – and we haven’t even mentioned the interest which is being added, daily, to the capital sum he/she borrowed. This type of loan in particular is an example of appalling corporate irresponsibility, because young people in Cayman don’t want to be seen driving around in a five year old Ford Taurus – that would diminish, or destroy, their ” street cred ” – and that makes them very vulnerable to what looks like a sweet deal.
Totally agree. In general, the income/debt ration calculation done by banks is (at the very least) very peculiar. They are more likely to get that credit line pushed through rather than telling a potential client that they are not likely to afford and maintain a half a million dollar house on a CI$ 50,000/year income. After all, banks are in the business of making money!
That said, there needs to be a reality adjustment by people again. Unfortunately, Cayman has taken a serious page out of the USA book where living in debt and on credit lines is the norm. The thinking is that if I really, really want it, I should be entitled to it. Perhaps it is time to go back to the “olden days” where you had to save up for something before you could buy it?
“They continue to dispute the figures revealed recently by government that point to just 200 homes being foreclosed in Cayman over the last seven years, indicating that their own research among realtors and local attorneys handling cases where homes are in jeopardy has found that the number is already in the hundreds for this year alone. Local online classified services now have categories selling foreclosed homes and a cursory glance at some of the local real estate websites suggests that foreclosures appear to be significantly higher than the official government figures.”
1 – the numbers given by Government are for foreclosures and not simply homes so that includes just land or commercial property in some cases and as a result we are talking about less than 200 homes.
2 – the CAEI group dispute numbers based on unspecified research and cursory glances? These folks confidently stated there were 3000 foreclosures of homes – pretty clear that number is off the chart guesswork just like the basis for disputing the official numbers.
3 – it seems to me that there is no misunderstanding of the problem. I heard the Ministers acknowledge that there are variety of reasons for mortgage defaults and some are just bad luck. But whatever the reason it does come down to managing a way through it or out of the financial crisis – in that case it seems to me that all of the advice being offered will be potentially helpful.
Solution 1) Convert all pension funds in Cayman to 401K style saving plans allowing people to access their money at any time but subject to a penalty- this might prevent some foreclosures
Step 2) Create a national insurance scheme to deal with on-the-job injuries and guarantee a minimal income during retirement e.g. Social Security
Step 3) Also mimic the United States credit system whereas after 7 years you can again borrow from the bank.
The issue with Cayman is this….we have a hybrid system a mix between the US and the UK with a flavour of laws comparing us to our competitor jurisdictions. Our legislators show no originality and no courage in this regard. The main bodies that comment on the draft legislation are puppets and use this excuse. In truth, copying our competitor jurisdictions might be practical in financial matters but not in areas of social economic concern.
So, what has happened is that by sheer chance or by some arrangement we have come to a position where we have a health insurance system that reflects the United States right ?No NHS here but then we go on from that a lay over a UK style pension system but do not bother on a whole to address healthcare like the UK or a comprehensive housing assistant program giving the indigents a free flat and a weekly allowance.
In terms of mortgage repossession we again use the US term ” Foreclosure” but it is indeed a repossession in the Style of the UK.
FOR SCREAMING OUT LOUD…..We need to either take the whole UK system or whole US system because this cherry picking of what we want and what we don’t want is driving the average citizens of this country to their knees.
$150,000 in pension account and you can’t touch it if you get sick to keep a home above your head. Home repossessed..cross your fingers and hope social services has enough in the “Budget” as they will tell you to pay your rent. We need comprehensive reform of our pension, healthcare, mortgage and labour laws not just modifications to a system that is broken.
Yes, change will be painful and difficult but it is time for a “New Deal”. A society of social responsibility where people can live in dignity in their old age and not plan their retirement in some foreign country. Perhaps the business community should realise how much money they are actually have lost by the exodus of the middle class when the year strike 65. They have taken their pensions and gone and your stores are clearly lack these aged folks pushing shopping carts around and talking to one another on the benches in local parks in case you haven’t notice. Imagine the tourist they would have brought to visit Grandpa and Grandma…O’ ye of little vision…
closing”’either way make up your mind a UK system or an American system but not this crap!
Would you recommend the US or the UK tax system to pay for it all?
anonymous at 8:06 pm your comments really makes sense, however you left out one main ingredient and that is INCOME TAX. If you are suggesting all of that then the only way to pay for it is through taxes. Don’t really know how many would be agreeable to that.
Here is the best solution. Pay your mortgages or move out quickly.
Anonymous 4.42 p.m. U are not immune, sickness, death, divorce, job loss, don’t blow shell! U may be next as snug as u may be in your rug!
Divorce – pay the mortgage or sell the assets. Sickness – get insurance for serious illness and have decent savings for a year’s worth of payments. Job loss – have a year’s worth of savings and if that runs out tough, home ownership is not a right. No-one should own a home and not have 12 months of mortgage payments as savings.
and after 12 months they can sell property if you miss 3 months
Yes, that sounds absolutely fair. It is how a mortgage works. You breach your promise to pay your home is at risk of repossession.
Ah, we live in a perfect world, do we?
We live in a world where the state should not bend over to protect the imprudent.
1.33pm, your comment are wonder in theory, IF…
the cost of living wasn’t so high one would be able to save;
the insurers were regulated to offer and/or allow (adequate) coverage for illness/disabilities;
divorces weren’t a costly process, even after assets are disposed; and,
job searches and job opportunities weren’t so difficult, due to employer bias and lax immigration and employment laws.
I am one of the lucky ones not to have these problems, but I too was there in 2008 until I had to supplement my income from abroad, until things improved on island- and, that was 7 years ago. Most Caymanians, unlike expats, don’t have this privilege. So, before you throw out theory, make sure you consider the political & economic systems for which locals have deal with – which have placed its citizens at a disadvantage.
Get real. If the savings cannot be put away with ease then the property purchase cannot be afforded.
Property owners need substantial savings for periods of economic stress, otherwise they cannot afford the property they are in. After that runs out move out.
Idiot. Unfortunately there doesn’t seem to be a solution for those in this world
I blame the labor, and immigration laws, for four problems — and the wealthy locals/Caymanians’ who carelessly invest in FDIs that rely heavily on imported labor. Teh C.I. Monetary Authority is also a huge problem, as well. Our regulatory body – including directors – are merely a bunch of sitting ducks that allow financial crime to brew in our islands due to the lack of proper oversight. I don’t believe they have even checked if the LIBOR rates (i.e. borrowing benchmarks) of local are accurate across these banks. I wonder what currency they are borrowing in and which banks they are borrowing from, for their effective interest rates and internal risk rates to be so high. Any investigations?
I know exactly what I had to deal with in the 80s to early 2000s when interests were Avg 11%. Servicing a mortgage was no walk in the park. I’m just glad to be free and cleared…
The C.I. Government need to focus their time on more and better regulation, if they are going to develop these islands for the betterment of their people and their country!.
SUCH A SAD SITUATION.
1.01-one of the other reasons lending is so costly here is pure cartel mentality as with everything on this island…no one watches them. And part of the problem is because that money costs so much more than elsewhere, even a little dent in your income can become a big problem.
The Cartel issue is a valid point. Historically, there has very rarely been a lending bank which has stepped out of line and undercut their rivals by offering cheaper mortgages. What was worse in the era before the ” credit crunch ” 2007/2008, was the ” spread ” which banks took between the interest rate they charged on mortgages, and the rate they offered to depositors. As a depositor you got say 6% but, as a borrower you paid 10%+. Easy profit when the local banks had such large deposits that they could could ” self finance ” their loan business.
The Government already has the private sector running the Cayman Islands’ Development for let the bit for your homes. Oust the current Government in 2017. In the meantime, go abroad and buy two (or 3) homes for the price of one. It’s a renters’ market on many lands across the seas…the pension and lifestyle is good too!
If you can’t pay your bills then your house is foreclosed. Which bit of that is unjust economics?
The brutal reality is that the entire middle class would have to deal with foreclosure of their home if job loss or illness strikes. We are a family with two college educated full time working parents. If one of us would lose their jobs or be struck by illness that would render us unable to work for several months, we would struggle to hold on to our house. The insurance alone is almost the size of a mortgage payment. We would manage for a few months but after that….There is no way that you can live in Cayman AND put enough funds aside that will keep you above water for more than a few months. Before anyone comments, note that our house is less than 2,000 square feet, we do not have a swimming pool, our vehicles are 5 plus years old and paid off, we do not own a boat, we don’t go out to movies and dinner (only on special occasions) and we do not have a full time helper……….But reality is reality – cost of living in Cayman does not allow someone to put sufficient funds aside for rainy days………
Are there some that just don’t budget or continue to live beyond their means? Sure! But there are also the ones who are trying their best but one little strike of misfortune has them drowning.
Maybe a more affordable house lot, or more modest finishes. Any number of things to reduce the cost of the house to begin with. Just because a bank will lend you money for a $500,000.00 house doesn’t mean you should take it instead of a $300,000.00 house.
Here’s a straightforward solution to help avoid foreclosure. Pay your bills!
Crimea Rivers u obviously are sleep walking and paying no attention cause u up there with them high and mighty living off our taxes!
Be careful how you spit in the sky there, r*mphole.
Pure bunk their is no problem unless the government is lying and the CIG would not lie
after all the government is the people
the whole loan scheme is a scam to begin with for suckers imagine not having a problem for 20-30 years in a casino the house wind every time overtime.
huh?
The problem is Government’s and is largely of Government’s making. Enforcing the pensions law, the immigration law, the health insurance law and the maintenance law would have prevented many of these issues – but now they are here. Government can and should prevent the problem from growing by enforcing all laws fully from now, but one thing should be clear – it is not the bank’s fault and no public funds should be used to pay private debts. Allowing people to have what funds they may in their pensions to be used only kicks the problem down the road a few years.
How about pensions that are insured? My own compulsory pension has lost thousands of dollars. Did the management corporation of the pensions suffer equal losses?
One reason that the cost of mortgages is so high in Cayman is because the banks are too slow to kick out those that default. It is the interests of those that pay their bills and those who aspire to property ownership that impediments to possession and sale are removed. The bankruptcy law also needed updating. These activists have no credibility given their vastly inflated figures and wanton scaremongering.
Give it a rest. All of their myths were put to rest last week. Next.
I truly empathize with anyone losing their house, but I really do not understand what laws they want the government to enact that would assist them. I don’t mean to be harsh but I do believe the time has come when not every one will be able to afford a house. Like other places some people will always have to live in rental properties. With the high cost of living and with so many unable to make a significant wage owning a house is out of reach for many. It is so sad but some people will never qualify unless we go back to the good old days when we could take years to build a structure with mostly free labour from friends and family. Now there are planning rules and restrictions to deal with, high interest rate and low salaries. Not a good mix at all.
I agree with the vast majority of what you say but it is not necessarily sad. Many people of significant means nevertheless choose to rent. Home ownership is quite expensive and that is even with the very low interest rate environment today. When rates start to go up it will become more expensive.
I agree with you but back in the day Caymanians never lived in rental properties. We all had a little house, be it ever so humble. I am certainly not knocking apartment living but back in the day we didn’t have to live like that
i will take a handout. Everyone else does.
Bring back Mac. West Bat need plywood.
They may need plywood but we sure dont need mac.