Mortgage motion gets limited backing

| 27/10/2015 | 23 Comments
Cayman News Service

Wayne Panton, Minister of Financial Services, Commerce and Environment

(CNS): The government gave limited support Monday to a private member’s motion asking it to consider legislation that would prevent what are considered some of the worst, unfair practices surrounding home foreclosures. Ezzard Miller presented a motion during the LA meeting asking for government to look at developing a mortgage law as a result, he said, of the inadequate legislative provisions for home loans and the protection of equity. The motion was accepted with amendments, as the financial services minister said the Register Land Law already covered home loans, but there was no commitment from him to introduce a mortgage law.

Following a petition from members of the local action group, Caymanians Against Economic Injustice, and concerns that many people have lost their homes and many more in danger of doing so, the North Side independent member pointed to the unfair practices that seem to surround foreclosures. In particular, Miller noted, the massive discrepancies in original home valuations and the price that the banks sell repossessed homes for, which in some cases are wiping out years of equity that homeowners once had.

Miller called for legislation that would protect lenders and borrowers and prevent unfair practices that those who have lost homes or who are trying to negotiate with the banks say they are experiencing. From the inflexibility of the lenders to the shockingly low valuations when their homes are finally sold from under them, those who have lost or who face losing homes have raised concerns that the banks are concerned only with recovering the debt amount as quickly as possible at the expense of struggling homeowners.

Miller stated that lending institutions must have a right to recover their money and sell properties if necessary but he said that under the current regime the lending institutions have all the authority and “don’t seem to have a social conscience at all”. Homes, he said, are being lost not just by young people but those who have paid their loans for years, with little sympathy from the lenders when they fall on hard times, which in many cases is due to job loss.

Implying the possibility of collusion between lenders, valuers and real estate agents, making things worst for homeowners in trouble, Miller asked government to look at creating a new mortgage regime with alternative types of loans and mortgages and better protections for all sides to prevent people losing their homes and also save their equity and house values if they must foreclose.

During the debate, dominated again by the problems of growing poverty amongst Caymanians, Financial Services Minister Wayne Panton accepted the motion, saying government wanted to do all it could to address the problems. However, he was reluctant to accept that the lenders were at fault, denied any collusion and stated that the Cayman Islands Bankers’ Association had amended their code of conduct to do all they could to help people stay in their homes.

Panton said he appreciated that for those experiencing foreclosure it was the worst thing in the world and he was very sympathetic, but he felt there was adequate legislation and government was looking at other ways to help, such as debt management advice, as illustrated by the recent seminars organised by him and Marco Archer, Minister of Finance and Economic Development.

He also urged people to go to the banks at the earliest opportunity if they were in any kind of trouble. Panton said that it was not in the banks interest to turf people out and that keeping people in their homes paying something back to the bank and maintaining their properties was preferential to foreclosing and allowing houses to fall into disrepair.

Minister Archer also spoke about people living within their means and refuted the idea that foreclosure were being fuelled mostly by unemployment. Archer said that according to the banks, the top reason for home foreclosure was the break-up of family units and the loss of one parent’s income. The second, which he said he found the most surprising, was people giving up on mortgages and leaving the island. He said the banks reported that many cases of foreclosed sales were as a result of those with loans handing the keys over to the banks or abandoning homes and leaving Cayman. Unemployment or job losses was only the third reason for homes being taken by the banks.

After Panton had accepted the main gist of the motion, and during a debate that took up a considerable part of the day’s proceedings, Miller was still concerned that the minister believed there was adequate legal protection and that the banks were being reasonable.

The North Side member said there was no sign from government of any alternatives to help people retain equity or to address the staggeringly high insurance cover people were forced to pay or any of the other problems regarding the valuation regime and lack of independence that might offer some comfort to those in the middle of foreclosure. But Miller said he would wait to see what government did to address the problems and, as has been the case with other topical and important issues, he would follow up and government could expect a parliamentary question at the next meeting of the LA.

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Comments (23)

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  1. Anonymous says:

    If the findings are showing that people are leaving with mortgages on properties,

    1. Are they concerned that persons who claim to invest in property to get PR because they want to be here should now show 100% ownership of the property versus a relatively small contribution of income?

    2. Maybe the banks now need to reconsider the level of risk with expatriate workers when offering that sweet interest rate given to their preferred customers, because we will all pay in some way for their foreclosures.

  2. Anonymous says:

    Ppl leave the island and give the keys to the bank because of the cost of living.

  3. Anonymous says:

    Every time these toads start bleating on the radio, empowered by their go to man, Mr. O.C. Connor, I have no choice but to switch channels or turn the evil thing off.

    Privileged Caymanians don’t give two hoots about their struggling countryfolk. It comes across so blatantly with their sanctimonious claptrap on that Radio Cayman morning program. I heard Connor telling his struggling Caymanians that they should contribute to folk worse off than themselves. Bloody Hell, that’s a bit rich.
    Your people are practically on the street, losing their homes and jobs and you say they should contribute?

    There will be more to be said about this matter in the near future. Real Caymanians will see through the charade before long.

  4. Number 1 says:

    From reading this article you can clearly see which politicians really care for the Caymanian people, and which politicians care for the banks interest.

    Wayne Panton has already made up his mind, it seems that Caymanians and not the bank lenders are at fault. And Archer acknowledges the hard times, but seem to have no answers or solutions to help Caymanians. It seems all talk from these guys.

    Ezzard is the only one that is consistent with his message of putting Caymanians first against large banking giants. The cost of living is too high. Caymanians are being trampled on in their own home country. Commenters on CNS, the media and elsewhere portraying a false status quo on what Caymanians say or how they like. So feel no surprise less than 10 rate this comment and you see 50 thumbs down. Or you hear anonymous critics on CayCompass, saying we are like this or like that.

    It is a shame that only one man from North Side is speaking out to change this grim reality. Only a few MLAs are standing up, the others are just pure talk!

    • Anonymous says:

      Why does there have to be “fault”? It is not about fault. It is about whether the government should interfere in mortgage contractors and assist those that are in significant default of the borrowing obligations. It is your sort of “them and us” victim mindset that is at the heart of much of the problem.

    • Anonymous says:

      If you read the article properly you would see that the two Ministers are actually trying to do something to help by taking action in several ways. It is Mr Miller that is doing all of the talking and none of the doing.

      • Anonymous. says:

        Al of you every four years elect a government charged with the responsibility of leading the country. Politicians are supposed to represent the electorate in a way to make life better for everyone and not bring stupid motions that cannot be implemented. Politicians are not supposed to concern themselves in people’s personal mortgages, or other debts. The banks should properly vet these potential applicants to see if they can really afford a mortgage and not just for six months. Not everyone can afford a house!! Back in the day, most Caymanians owned a house but these houses were built over years and most of them without mortgages. Planning laws should be amended to allow persons to be able to build their houses over time.

        You work and save a little money, get the foundation done and go on from there. When you go and get these huge mortgages that you cannot afford in the first place you are setting up yourselves for failure. Families need to return to the old way of each one helping each other, if one member of the family has a few extra dollars help your sibling out , if you are able to offer a few hours baby sitting for each other so that each one can probably get a few hours more at work do so. Teenage girls and boys need to stop having unprotected sex and bringing children into their lives that they cannot afford. Instead go to school, apply yourselves and try to pull yourselves out of poverty. get rid of the mindset that Government will take care of you and your babies through social service and forcing the banks to let you stay in the house even though you are not paying your mortgage.

        Banks and lending institutions are in the business solely to make money for the shareholders not to allow you a cushy life without paying for it. Learn to do your own hair and nails or do each other’s and stop spending your pay cheque on such things. I don’t know what it will take to get you people to understand that you are responsible for your own debts, government is responsible for capital works, drafting laws and implementing them to keep us all safe so that we can all exist in harmony. Government needs to hire personnel to carry out its mandates but it is not governments responsibility to provide jobs beyond what is needed to carry out their mandates. Private sector is set up to make profits, offer services to the public by hiring staff to provide their services ( for a service fee) immigration and labour departments are set up to manage the immigration of persons to the islands whether for fun or work and manage it so that as many of our people as possible are able to get the jobs provided by private and public sectors.

        Education is basically free for Caymanians from preschool to university , so I really do not understand why every eligible Caymanian is not qualified to do something. For God ‘s sake apply yourselves to take these positions. If you are qualified and unable to get a job that is available in you category then get yourselves together and march on the Admin Building and LA and do this until you get results.just postings online will not help you.

        If you get the opportunity to interview for a job clean yourselves up and make a good impression with a properly written Resume. If you have been out of work for sometime and do not have proper work attire for the interview go to the NCVO bargain store and try to get a few outfits. if you do not have a few dollars to pay ask to speak to one of ladies in the office at the hone or the preschool and someone will be able to help you. When you get the job, be the first to show up and the last to leave. Show up everyday!!

    • Anonymous says:

      I think in the end this needs to be looked at in a case by case situation. There will be resonable requests and some not so reasonable. If one of those mortgages is for a $400,000 home and next to nothing has been paid should the Government help there? Obviously not. But if you have someone that has made significant payments and has run on hard times than sure.

    • Anonymous says:

      The only “fault” here lies with those who live beyond their means.

  5. Anonymous says:

    Cayman politician maths. They may as well speak Cantonese for all the sense it makes.

  6. Anonymous says:

    I think they may be talking about individuals that have paid mortgages for years but for whatever reason stop paying them. The bank in turn is only trying to get its money back so they sell the property for the remainder on the mortgage. So you have already paid $30,000 on your mortgage you lose it.

    • Anonymous says:

      That is interest payments not equity.

      • Anonymous says:

        Anon 1225 a part of the problem is that the people have paid a portion of the mortgage but lose everything. In the example given they have invested $30,000 so when the bank sells the house perhaps it is felt that they should get something back. That is not interest it is equity.

        • Anonymous says:

          Part of the problem is that many people don’t understand that having a mortgage means the bank owns the house, you do not. You are effectively renting from the bank until the mortgage is paid. Stop paying the rent and you are asked to leave…simple. If you can’t afford to put aside a certain amount as a buffer for unforeseen circumstances then you can’t afford the house. Ownership is a privilege not a right.

        • Anonymous says:

          Nope. The vast majority of it will still be interest. Equity is what you have once the property is disposed of. If the disposal of the property has nothing left then there is no equity.

        • Anonymous says:

          You only get equity when you have paid in more to your mortgage than the monthly repayments plus interest. In the example given, unless it was a very very cheap mortgage, 30K would likely only account for the interest over a long period of time as described.

  7. Anonymous says:

    I notice how many homes are built that are far bigger and more expensive than the other homes in their neighborhood. They will be worth much less than the same home in a better location. If you have a big payday and build a grand home on granddaddy’s lot in some lower-end location, you will not be able to get your money out of it when hard times come.

  8. Anonymous says:

    “[W]hich in some cases are wiping out years of equity that homeowners once had.” That is nonsense. The disposal simply indicated that the value of the property was lower than the owners believed them to be. So all that was “wiped out” was the owners’ mistaken belief that there was a level of equity in a property that was unrealistic.

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