Miller calls on CIG for mortgage laws

| 06/08/2015 | 50 Comments

Cayman News Service(CNS): With more than 150 Caymanian families currently at risk of foreclosure, the MLA for North Side is bringing a private member’s motion to the Legislative Assembly later this month asking government to consider legislation that will pave the way for mortgage protection. Homeowners in Cayman not wealthy enough to buy their home or land outright finance their homes with a demand loan. But with no mortgage laws, banks are able to take homes within a matter of months of any default on payments and can also wipe out equity in the homes to recover the loan amount.

Ezzard Miller said that many Caymanians are experiencing difficulties with their loans and losing the investment as well, with no law to protect that wealth. He wants government to consider legislation that offers proper protection to the lending institutions but also provides property protections for the borrower as well, especially their equity.

Miller pointed out that the lack of long-term investment capital available to local banks to enable them to take the long-term risk that comes with mortgage lending is one of the main reasons why they work on demand loans and why they are quick to foreclose. He said the system at present is risky for both lender and borrower. However, Miller said this could be addressed with further amendments to the pension law to require funds to invest at least part of the pension cash they collect each month from the 30,000 plus workforce here in Cayman.

This, he said, could provide the necessary long-term capital to fund a proper mortgage scheme that would offer more competitive interest rates and considerably more protections on both sides.

Government has confirmed the loss of 17 homes in the first quarter of this year and has also indicated that there are around 150 more properties currently facing foreclosure. While local activists believe there could be many more, based on their experiences and information from real estate agents and lawyers, the official numbers are causing government concern.

The ministries of financial services and finance and economics have also organized a series of community seminars and a volunteer advice service for people in trouble to help them communicate with the banks and get back on track before homes are taken away and the equity wiped out in a fire sale. The first seminars will be in Bodden Town next 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.

Miller said homeowners at risk need more than financial advice and the system itself needs to be addressed to create a more solid regime for home ownership. He is hoping he can persuade government to look at the introduction of a mortgage regime and at the same time require pension money to stay in the country — an issue long argued as a way of fuelling the domestic economy.

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  1. Anonymous says:

    it’s a shame to see cayman people be so dumb.If you have a pension the same way people use it to get a home use it to save your home .I’m sure the person talking about a law suit would change his/her story if it was their home bein taken away

    • Anonymous says:

      I am the person who talked of the law suit. I have almost had my home taken away twice. I sold all I had and worked as many menial jobs as I could get until I managed to sort out my own debt problems, same as anyone else. So no, I have no sympathy wake up this is the real world and all over the world we are all having the same problems. Live within your means and don’t get what you cannot afford in the event you lose your job. That’s what I did. I cut up my cards and I have gone without (empty fridge and none of my work clothes are less than 7 years old) for two decades just to make sure I can make those mortgage payments and save myself from the banks threatening to repossess my home again. Having gone through that, and only now beginning to build up a pension for the future, your idiotic MLA’s propose you STEAL the money I worked so hard to save for my retirement? Not without a law suit and a strongly worded complaint to the OT minister in the UK.

    • Anonymous says:

      Um, I think your precious Ezzard is planning to steal this money from expats pensions my dear, not let you borrow from your own pensions. And that’s why that person talked about the law suit because what old EZ proposes is illegal and constitutes theft.

  2. Archie says:

    “However, Miller said this could be addressed with further amendments to the pension law to require funds to invest at least part of the pension cash they collect each month from the 30,000 plus workforce here in Cayman.

    This, he said, could provide the necessary long-term capital to fund a proper mortgage scheme that would offer more competitive interest rates and considerably more protections on both sides.”

    Brilliant idea Ezzard. if only Bear Stearns et al had the foresight to invest in a portfolio of non-performing mortgage assets, as opposed to what they did hold, then you might have averted the 2008 global financial meltdown.

    Oh, wait.

  3. Anonymous says:

    Touch my pension that I paid for our of my wages Ezzard and you will have a law suit on you before you can blink. It is ILLEGAL and I won’t have any hesitation in suing you and the government if you even try this. Plain and simple any proposal to touch our pensions is THEFT!

  4. Anonymous says:

    Why not use some of the pension to keep people from falling behind on payment until they can get jobs or recover from illness

  5. Anonymous says:

    I live my life by a simple rule. If I can’t afford it then I cannot have it. I cut up my credit cards, I paid off my loans, I rarely went out and I am fruigal with what little money I earn.

    This seems to be an argument that falls on deaf ears in Cayman as everybody seems to want what they can’t afford and then expect a free ride when they get into financial difficulties.

    If the government continue to wrap everybody in cotton wool, then the madness will only continue.

  6. Anonymous says:

    Miller is having a big week in the LA

  7. The Country With No Plan... says:

    As for investing a % of OUR pension funds in OUR country because we might lose it? You will lose it when the Bank close down but not when someone is foreclosured.!!! If that was the case why the Banks still open? Because Foreclosures are budgeted for, reserves are put aside and the bank sells your property and continues. The only change is someone has lost their home and will probably rent an apartment that someone else has a mortgage for with the Bank. So instead of paying your own mortgage, you paying someone else mortgage ( who did not default) to the sand bank – pension fund money, U.S. money, Chinese money, that’s how it works.

  8. The Country With No Plan... says:

    I have the comments on what equity is, …. risky it is to invest a portion of OUR pension money in our own country because we will lose it … to don’t borrow what you can’t afford .., and I am appalled at the level of ignorance on this topic. Yet, without understanding, we blog like experts. I am no genius but work in the financial services so let me add to the conversation.
    1. Equity is the difference between what you owe ( loan balance) and the market value of your property. That equity is generated by your payments on your loan – your payments every month to reduce your loan balance + the benefit of what the market price is. But the majority of your equity comes as a result of your monthly payments to reduce your loan. So if a loan was $200,000. You paid the loan for 10 years at $2,000 a month, must of which was interest. The loan is now $100,000 and the property is valued at $250,000. Your equity is $100,000 from paying down my loan and $50,000 market value appreciation.

    You lose your job, missed 6 months payments and the bank is foreclosing.

    So you would think, the bank would sell for $250,000, take the $100,000 you owe them, minus some legal fees, and give you YOUR Equity. $250,000 – $100,000 owed to the bank, – minus say $5,000 legal fees and give you $145,000 back. A $100,000 is your money paid monthly for 10 years and $45,000 is equity gained by market value appreciation.

    Unfortunately, it does NOT work that way. The property is listed by the Court, at a Reserve Price of $250,000. No sales happen. The Bank goes back to Court and informs they can’t get it sold as the Real Estate agents say their buyers – WHO KNOW – it’s being foreclosed are only willing to pay $150,000. Court drops the Reserve Price to $150,000. Real Estate agent informs his client. Client says – if they dropped to $150,000, I asking for a further drop. Client says my last and final offer is $125,000. Court agrees. Sale happens. The Bank takes their $100,000, PLUS the interest for the months you did NOT pay ( about $6,000), charges you for the legal fees ( say $4,000) and gives you the balance. What is the balance? Your $250,000 house sold for $125,000. $125,000 – $100,000 ( bank) – $6,000 (bank in interest) – $5,000 ( legal fees), you get $14,000 back for the $100,000 you paid in equity and $45,000 you property value increased. You get $14,000, a bad credit record and can’t get another loan. That is what Ezzard is asking for some protection for. That the Reserve Price , moving from $250,000 to $125,000 and the Equity of $100,000 of your money that you got $14,000 back for be protected.

    I thought I would add some information.

    • Anonymous says:

      When you say you work in financial service, I really hope you have a very very junior role. And here is a tip, you might want to look into other professions because my guess is your future in the industry is not a bright one.

  9. Anonymous says:

    Ezzard….don’t need to do this my friend….a big country right to the North (USA) allows anyone to touch their pension anytime they want subject to a 10% withholding tax. It called a 401K early withdrawal penalty.

    Now, if said person goes through a divorce, illness or job loss then they can tap the pension or 90% of it to save the house from the bank.

    The government can keep the 10% and get this “actually transfer it to social services” instead of building the normal pharaohs projects they earmark our funds for their friend for.
    So, in the case that some persons do actually loose their homes after fund is exhausted we can take care of them.

    The second biggest problem in Cayman is government trying to tell you what to do…the biggest problem in Cayman is government not doing what they are suppose to do (enforcing laws and regulations)

  10. Anonymous says:

    OK Ezzard so you say 17 homes have ‘were lost’ in the first quarter of this year and 150 more ‘face foreclosure’. So, if those run through the process at 17 per quarter, it will be over 2 years before they are actually ‘lost’ – ie sold by their lender. That is not quite the rush to grab sell and run that you mention. The reality is that Banks give people every opportunity to come good on their payments and they have to prove that they have done so before any court will allow the foreclosure – Banks can’t just wake up one morning and decide that they will sell someone’s house. At the end of the day if banks collect less than they are owed then they in turn will not eb viable and wont lend anyone anything. Banks are not charities.

  11. Anonymous says:

    So Essard is wanting the pension funds to pay out house loans that then are protected so that if the people do not pay we cannot evict them and sell the house.

    He effectively wants us all to buy people free houses with our pensions

  12. Anonymous says:

    Ezzard, you so much as try and touch my pension for this hairbrained idea and I will start a class action to stop it. You know nothing about economics or finance so stop pretending like you do! There are ample avenues for mortgages on the island. People just have to live within their means. Being Caymanian (or any other nationality) doesn’t mean you are entitled to own a house, especially one you can’t afford.

    • Anonymous says:

      People have to live within their means? So you think that is the only reason people lose their homes? Someone becomes ill, is absent from work so often she is let go, so with no job and mounting medical bills she misses a few payments. The bank harass for payment, she repeatedly indicates her situation and she has managed to find a job, albeit paying much lower than she was earning before but with medical bills and cuc she can’t even make a quarter of the mortgage payment but she tries to pay something. Bank is still not happy, they want full mortgage payment so after 9 months they move to foreclose. Since you are such an expert about living within your means please advise what she was supposed to do.

      • Anonymous says:

        All good points you raise and I beleive the banks are sympathetic in these types of scenarios. However if someone has no savings and misses a mortgage payment immediately after losing their job they probably should not have had a mortgage in the first place. That is my point. Contrary to popular belief owning a home isn’t always the best option.

        • Anonymous says:

          Did you conveniently skip the part of mounting medical bills? This is where the savings went but am sure you will never have to endure that situation since you have it all planned out.

      • Anonymous says:

        If have insurance to cover me against these eventualities. Others should too – just because they (like everyone) fall on hard times does not justify stealing someone else’s hard-earned pension funds, leaving them ill equipped to support and feed themselves once they stop working/retire. These people save this money so that they do not have to sponge off others when they retire.

  13. Trill B says:

    Using pension fund money for investment in Cayman has been suggested by politicos before, (Mac I think), and quickly shot down, as will happen this time. People want their pension money invested in real investments, not crackpot schemes on flyspeck island.

    You have to laugh really. This is similar (but opposite) to Kurt’s idea to utilise the capital that is on banks balance sheets, and put it to use for local projects. That one left a considerable amount of egg on Kurts face when it became obvious he understood nothing of balance sheets.

    Ezzard why don’t you invest some of the Govt pension fund in local banks? Oh yes, that’s right, it’s not funded. It’s just one big liability, like, ……. well one politician comes to mind……….

  14. George Ebanks says:

    The reason so many critics are suddenly “popping” up out of the wood works against the proposed motion of MLA Mr. Miller is because they themselves might be profiting from the illegal and callous and unorthodox practice that is being used here currently.
    Long term capital is sorely needed and allowing large portions of ALL pension funds to remain in Grand Cayman, invested with local banks, in a segregated account for long term lending purposes would address the issue.
    My brother Ezzard Miller. You have my full support and endorsement.
    Go!

    • Anonymous says:

      The problem with I believe half the mortgages are people were lent the money to build their homes, for some reason the bank lent them more then the borrower could actually pay back, and eventually it is a dominoe effect. One isn’t happy with a nice comfortable 3 bedroom home with two bathrooms, no they have to have the best of everything wood floors, stainless steel appliances 4-5 bedrooms, 3-5 bathrooms, and then mortgage is due and they can’t pay it. Sorry no symphaty there. I do feel for anyone who really lost their job, who was paying their mortgage always on time, and someone who falls ill. That is whom she be helped or insurance to be covered.

      The one thing though the banks are selling the homes for whatever they can get, if there is a balance the individual is still responsible for it. That government should look into, if the house and land is valued more then what is owed, a fair market value should be placed on the house so the bank and borrower will get what is owed to them. Not sell the house for less that what is owed!!!

  15. Anonymous says:

    I agree that people should not borrow too much and then not be able to pay it back, but what about people who fall ill, have an accident, or lose their job? There needs to be insurance products in place to cover events like this. Critical Care Insurance or Mortgage Protection Insurance is available in the UK to UK residents and they’re not expensive like the ridiculously high premiums insurers charge on this Island. As far as I know, there are no such insurance product here. Why is that?

    • Anonymous says:

      I am aware of a life insurance rider which will cover these expenses for a set period of time while you cannot work due to redundancy, illness an a few others. This products exist but as I am sure many insurance companies will tell you, most of us are vastly underinsured (and admittedly some of that is because its expensive). Most people I know with mortgages only have property insurance and life insurance to cover the mortgage.

    • Matey says:

      Because there would be too many fraudulent claims by people wanting insurance money for pretend illnesses.

  16. Anonymous says:

    Yes great idea… Force pension capital to invest in bad loans… Next he will want to force banks into subprime mortgage loans, and as everyone knows by now, that turned out really well… The is a REASON for the defaults and its NOT the bank’s doings..

  17. Anonymous says:

    So let me get this straight. If it were up to Ezzard, I as an expat who basically works hard for a living, has to pay into a pension fund, possibly can’t get the damn thing until after I have left the Island for 2 years (3 years with the new proposed amendments), can’t use my pension to purchase a home in my own country, can’t use it to purchase a home in my adopted country, must now, if Ezzard has his way, see my pension funds being invested in a country that has little or nothing in the way of investment portfolio? Is this correct? The man must have lost his cotton picking mind driving from North Side to George Town.

    • WaYaSay says:

      Let me get this straight. You as an expat can come to Cayman, work for twenty years, say your most productive years, 25 to 45, contribute to your local pension fund, build a healthy balance of several hundred thousand dollars, leave the Island for 2 years, collect ALL of your pension money, live high on the hog, without working, for the next ten tears, return to Cayman at 57, work until 65 (when your earning power is usually at its lowest), again contribute to another pension fund for those ten years, get PR, stay in Cayman for the rest of your life, collect your pension until you die.

      On the other hand, me as a Caymanian, who has been contributing to my pension fund for 40 years and amassed several hundred thousand dollars, which by law has to remain in my pension fund, and I collect the same as you until I die.

      Both of us collect the same amount each month, so when we are old and have a catastrophic medical emergency, we put the same strain on the health system, except you get to blow 20 years of contributions while you do nothing for 8 years from years 47 to 55, yet you want to whine, bitch and moan because you have to wait 2 measly years while I have to wait, and work, until I am 65………….Yes the system is seriously biased against you?

      Shall the Caymanian people get you some cheese with that whine?

      • Anonymous says:

        oh get over yourself..who the hell is gonna work 20 years leave and come back at 57…

      • anon says:

        pensions are defined contribution and not defined benefit. in the scenario above the expats funds would run out a few years into retirement. Also under the new points system they would not qualify for PR unless they were financially secure and could afford to pay for their own retirement.

        • WaYaSay says:

          I understand fully what defined benefit means, I agree his would run out before mine, if we both live that long…………none of that matters if the hypothetical medical emergency happens in 4 or 5 years.

          The alternative is even bleaker………….Both if us might die before we are 70. In that case, my boy above had a wonderful 10 years, living large off his pension money paid into the Cayman pension provider in one lump sum………..while I get to leave mine behind……….even if I lost my equity in my home and is homeless when I die.

          Your option still sounds better, if you are an expat in Cayman.

          What kind of cheese do you like best, whiner?

          P.S. With regards to defined contribution…………Remember you only paid 1/2 of that fat pension balance, I, as your employer, paid the other1/2…………..would it not be fairer if, when he got to pull that lump sum out, that you had to share 50% of it with me, your employer?

          He obviously got it by fraud and corruption, as he told me, his employer, that it was for retirement when I agreed to pay 50%……….or does that not count as corruption in your book?

  18. anon says:

    don’t buy what you cant afford and don’t touch my pension ! that is all.

    • Anonymous says:

      Bingo. How about people don’t take loans they can’t afford? If they don’t understand how to figure out if they can afford it then consult an independent financial advisor. Doesn’t this make more sense than a paternalistic government trying to bail them out when it can’t even balance it’s own budget consistently?

  19. Anonymous says:

    It is a shame that neither CNS nor Ezzard have done any research. The Registered Land Law sets time frames that lenders must adhere to when a default arises. There is a wealth of authority regarding lenders, when exercising their power of sale following default, realizing a proper price for the property. There is no need for any more legislation.

  20. Anonymous says:

    Pension portfolio assets cannot be invested in non-performing “junk grade” loans. Anything below “investment grade” has no place in a pension portfolio. Thankfully, the imaginative independent member is not a money manager.

  21. JTB says:

    It’s worrying that an MLA such as Mr Miller can be so completely ignorant of the laws already in force, which provide all the protection for both banks and borrowers that he is asking for.

    It’s no surprise to hear Mr Miller sounding off about subjects on which he knows nothing of course, or for CNS to grant him an uncritical, unquestioning platform in which to do so.

  22. Anonymous says:

    If jumping on a stupid bandwagon was an Olympic sport then Ezzard would be a gold medal prospect.

  23. Anonymous says:

    How this any different then anywhere else, i you don;t pay your mortgage you lose you home and whatever equity is in it..If banks can’t foreclose for non payment they will not loan.

    • Anonymous says:

      Equity has nothing to do with loan payments. In fact, equity is the added-value to a property based on factors unrelated to loan conditions, such as current market value, amenities, property enhancements, and the laws of demand-supply. Stripping a mortgagee of his/her equity is an unconscionable act by foreclosing on properties below market.

      It should be a law against this. For a few months of missed payment, of about CI$3000- CI$5000, a homeowner stands to lose tens to hundreds of dollars in equity. Is this the reality of Cayman’s poor banking and investments legislation?

      These little islands have to do better. That’s why many people are unsympathetic toward the financial system that is now strained by U.S. Financial Sanctions and cross-border lawsuits , exposing financial fraud and tax evasion. This sh!t in the Cayman is the epitome of fraud i.e. an economic manipulation of its customers and, in turn, an unfair economic advantage/wealth shifting due to poor laws and lack of government intervention.

      These circumstances, without a doubt, are malicious, at best. .

      These are some hard times Cayman. And, I do feel sorry for the folks embroiled in this “foreclosure mess”. Plus, having to deal with a high cost of living; no unemployment benefits; pension fund(s) locked-in until retirement age while expats can repatriate their pensions for use and still return to work on the islands; no adequate disability/illness benefits, etc

      Very Disturbing.

      PURE GREED!

      • Anonymous says:

        Equity is the buffer to protect the bank’s committed capital when a borrower defaults. It is pretty integral to the process. However don’t let reality get in the way of good fantasy moan.

        • Anonymous says:

          EQUITY is the difference between the (market) value of the assets/interest and the cost of the liabilities (i.e. loan) of something owned. EXAMPLE: A home worth $350K less what the homeowner owes bank $150K, results in $100K equity. You’e telling me that a bank should be allowed to eliminate $100 of added-value in someone home “to protect committed capital”? What Capital Costs (i.e. cost composition) are this steep that a homeowner is positioned (by a bank and country laws) to go bust on his/hers long-term investment.

          Perhaps, you all need to revert to a U.S. cases where the a U.S. Judges have levied an “inconscionable act” verdicts (in favor of the mortgagee) for such predatory banking behavior. Restructure the mortgages for people to pay lower premiums over a longer period of time.

          CAYMAN FINANCIAL LAWS ARE THE PROBLEM! and it globally known high cost of living, in a small where only the rich the can thrive!

          PS> I’m still waiting to hear about the why the LIBOR/Banks borrowing cost are so high. CIMA?

  24. Anonymous says:

    There is a huge risk when playing around with peoples pensions and politicians start to see it as their own piggy bank.
    Investing the pensions in Cayman puts all your eggs in one basket, in this case if the Cayman economy crashes, for example, if independence occurs, house prices would plummet as people leave and everyone pensions take the hit. So Caymanians will not only lose their house, and job but their pensions as well.

    • Anonymous says:

      Right, they better not invest my pension funds into risky home loans.

    • McCarron McLaughlin says:

      Rather to lose it here in hard assets like land then into those paper products on wall street that aren’t worth the paper they are written on.

      • Anonymous says:

        I and many others would rather not lose it all, than to invest in essentially bad mortgages that people don’t need to pay, at low interest, like Ezzard is suggesting.

        He essentially wants us to take all the risk and if by a miracle it does work out, there is no reward.

  25. Che Guayabera says:

    Go Ezzzzzz. Save us from these capitalist pigs. Havana we must become. Socialismo o muerto!!!

  26. Anonymous says:

    more ezzard waffle….live within your means!…end of story.

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