New bill aims to slow down home foreclosures

| 03/09/2020 | 54 Comments

(CNS): The Law Reform Commission has issued the draft Registered Land (Amendment) Bill, 2020 for comment after consultations led to a bill that will slow down the foreclosure process and require lenders to engage with borrowers before taking people’s homes. The legislation, which had input from both the public and stakeholders, is the product of a detailed examination of the manner in which charges over land are regulated, officials said.

Growing concern about foreclosures led to the decision to re-draft the law, fuelled by anecdotal evidence which suggested that many more homes were being repossessed than government figures suggested, and in some cases very quickly, as well as pressure from MLAs.

The discussion paper that was circulated at the end of 2018 sought to consider whether reform of the law relating to the enforcement of charges over residential properties was necessary. The drafters pointed to the concerns about the number of foreclosure proceedings and the level of hardship experienced by the owners of residential property who have been affected.

A number of questions were raised, especially on the provisions dealing with the form of charges over land, the remedies of the chargee when the chargor defaults in payment, the manner in which the chargee’s power of sale is exercised, and the variation of the powers under the legislation.

The new bill now provides for a “Lending and Pre-action Protocol”, which is supported by a “Financial Circumstances Assessment Questionnaire”, both of which are intended to facilitate fairness and reasonableness between lender and borrower when seeking to resolve any matter of default in relation to a charge over land.

“The Protocol and Questionnaire seek to encourage greater pre-action engagement between lender and borrower before arriving at a decision to commence foreclosure proceedings or any other relevant action,” the drafters stated.

Stakeholders and members of the general public are invited to comment on the proposed Registered Land (Amendment) Bill, 2020 by 16 October.

The legislation can be found in the CNS Library or a hard copy may be collected from the LRC office.

Submissions should be sent to:
Director of the Law Reform Commission

By hand:
4th Floor Government Administration Building, Portfolio of Legal Affairs
133 Elgin Avenue, George Town

By mail:
P.O. Box 136, Grand Cayman KY1-9000

Or electronically to jose.griffith@gov.ky

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Category: Banking & money, Business

Comments (54)

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  1. Anonymous says:

    This is just an election ploy. Nothing will come of this. Especially, if the same set is returned to power. Don’t be fool people.

    A recent motion was introduced to the House, that actually had some teeth. What is being cooked up now isn’t worth the paper it is on. Good one PPM/CDP, but you won’t fool me with this.

  2. Anonymous says:

    When you lose your job or go through a divorce, or you become sick, these are all fair situations to renegotiate with lenders.

    Believe it or not, banks DO NOT do everything to work with you. Scotia Bank has a strict 90-day policy on defaulted loans where after that period you will lose your home if you cannot come up with a payment. Full stop.

    It’s easy to judge people when you live in comfort but there is a very corrupt relationship between banks, appraisers, and real estate agents on this island which is NOT regulated.

  3. Anonymous says:

    30 years to pay off a mortgage, out in 10 years if you rob the bank instead. Options.

  4. Anonymous says:

    Anybody else get notified that Saxon isn’t insuring homes any longer?

  5. Anonymous says:

    Great news for the rental market. Less homeowners means more renters.

  6. Logan born Caymanian says:

    This is want happen when our political disingenuous pirates and their delinquent constituents get together and conspire to further bilk the already overburden money lending system and their predatory institutions or their means to influence and control our society, to ease their own political burdens and responsibilities .With the assured knowledge that rest of us decent and responsible borrowers and account holders will end up paying for their irresponsible shit ! Profiteers never loose!

  7. Predatory loans and survivalist dwellers says:

    We have some people here now who are basically operating in a criminal fraud Urban pirates like dynamic or environment, please don’t empower them with laws to protect them thereby lowering standards in both our banking and our communities . If it’s not broke please please don’t F#%@! It up with good intentions which frequently paves the way to another king of hell.

    • Anonymous says:

      LOL Hi Logan. Wow, like dude, yeah we get it, political disingenuous criminal fraud urban pirates dynamic or environment delinquent predatory want happen blah. Pass it round man!

  8. Uh, not so fast... says:

    I see a lot of commenters here placing the blame on the homeowner. Fair to a point. Economies change, circumstances change, jobs are lost, people get divorced, etc., etc. etc. All of which changes the dynamic that existed back when the loan was initially approved. It only makes sense for the bank to engage its customer when the customer’s circumstances change. And yes, there are some slouches out there, but you can’t paint everyone with that brush. Not everyone has the safety net of family to catch them when circumstances change. Remember Mitt Romney telling students to just “borrow money from your parents” when they need help with tuition, rent or to start a business? Laughable to assume that we all have that as an option.

    There is also the unspoken collusion that exists between some bank employees, real estate agents and property appraisers (key word here, “some”). I see a comment below stating “yawn…what nonsense. the last thing a bank will ever want to do is foreclose….its a situation where everybody loses…”. Sorry mate, but you’re wrong. Real estate agents get commissions on sales regardless of whether its the sale of a foreclosed property or a regular sale. Real estate agents will kick back to bank employees when mortgages get approved (I worked in retail lending here for 15 years. I’ve seen it with my own eyes). Property appraisers have arrangements with banks to be the bank’s exclusive “trusted” appraiser, so they too get more business when bank foreclosures increase. I’ve even seen property appraisers undervalue homes, putting the mortgage “underwater”, giving the homeowner more incentive to just walk away. Which then leads the bank to foreclose, sell, and then everybody gets a cut. There is a lot of shady, underhanded collusion going on with foreclosures on this island and it begins when banks do not engage homeowners in distress to come up with a plan to save the mortgage. There are unscrupulous people out there that have incentive to stand by and watch as homeowners in distress get into deeper and deeper trouble.

    • Anonymous says:

      Really hope more people tead this. 1000 likes if I could. Great to see somebody exposing the truths!!

    • Anonymous says:

      Amen!

    • Anonymous says:

      Property appraisers have arrangements with banks to be the bank’s exclusive “trusted” appraiser, so they too get more business when bank foreclosures increase. I’ve even seen property appraisers undervalue homes, putting the mortgage “underwater”, giving the homeowner more incentive to just walk away

      I’m an appraiser and this is absolute nonsense. There’s no special arrangements and we only do what we are given by the banks. And we have to adhere to strict protocol by our governing so pipe down with your conspiracy theories.

      • Uh, not so fast... says:

        @1:42 pm Mr. Property Appraiser, you might know what YOUR firm is doing (or maybe you don’t?) but there have been many property appraisers on island that have come and gone and you couldn’t possibly know what goes on with all of them. As a 15 year management level professional in commercial and retail lending in the Cayman Islands, I can tell you in no uncertain terms that retail banks in this country will not accept property appraisals from any and all appraisers. Retail banks on island that I’ve worked for will not finance a construction project or a home purchase if their preferred appraisers are not utilized. And to my knowledge there is no government oversight body in the Cayman Islands that regulates property appraisers. If you’re referring to your own professional bodies who’s professional ethics you’ve sworn to uphold, I can point you to several professional accountants, lawyers and doctors how have pissed on their profession’s ethical code on this island for a buck, so don’t tell me that swearing an oath to a profession makes anyone above reproach. Heck, some are sitting in Northward right now. I’ll leave it at that.

  9. Anonymous says:

    Many people have lost their jobs and are seeking new ones, almost certainly not at their original salary.
    Business is business and if you are highly leveraged, well you took that risk.
    But who the hell saw this plandemic coming?
    So for people with loads of cash to hate on the people that probably funded them, I have two words and the second one is “you”.

    • Hubert says:

      There are simply too many people here who are highly leveraged and living well beyond their means. That was the situation a year ago and now those people will need to make a change in their lifestyle very soon.

      • Anonymous says:

        Apply to NAU or go home?

      • Anonymous says:

        Everybody can easily have a tragedy and find they can’t pay their mortgage BUT living beyond their means is the main reason we see people here losing their house. This overspending didn’t pop up with Coronavirus and won’t go away with it either.

        People want houses that they know full well they can’t afford. They get people to co-sign a mortgage they have no business getting. Every chance they get, they’re skipping payments and running Miami on a shopping spree but can’t figure out why their mortgage isn’t going down.

        Not me. I bought a cheaper house than the bank said I could finance. I give up luxury cars and trips and stuff to know I can always pay my mortgage.

  10. Anonymous says:

    The article says that this law will “require lenders to engage with borrowers before taking people’s homes”. As anyone who has worked in this field knows very well banks put enormous effort into working with borrowers to try and avoid foreclosure because everybody loses in a foreclosure situation. The obvious result of this law, if passed, is that it will make it much harder for young Caymanians to obtain their first mortgage and get on the property ladder.

    • Anonymous says:

      If that is true then all the banks have to do is amend their schedules to remove the language that states they can proceed with foreclosure as soon as the first payment is late even if you do pay it eventually. If the banks are willing to work with borrowers they shouldnt need to use this mechanism and therefore can remove it from their schedules.

  11. John Harris says:

    The court process could do with reform too. At the moment it’s sale by auction or nothing.

    We should introduce a system like the UK’s suspended possession orders where the Court determines a fair rate at which arrears can be repaid and the bank is prohibited from enforcement as long as that repayment is made.

  12. Anonymous says:

    Thought real estate was booming? Why would this bill be necessary?

    • Anonymous says:

      Real estate is not booming now and we are about to have 2 or 3 years of tough times market wise, until the market comes back. It will come back though in a few years. Next year is going to be hell for real estate prices no matter what the real estate boys say.

      • Anonymous says:

        I was told that this past July was one real estate agents BIGGEST July in their history.
        So, yeah.

        • Hubert says:

          Donald Trump is in real estate too and we know he is a regular liar.

          So many people in real estate have a real credibility problem.

    • Anonymous says:

      DUH…real estate does boom when agents get to sell everything a second time due to foreclosures. Wake up!

      • Anonymous says:

        Never a better time to buy. Always a great time to buy if you are a real estate agent in the Cayman Islands. Dees guys are something else.

    • Anonymous says:

      Never been a better time to foreclose

    • Anonymous says:

      Because the bandaid is coming off slowly but surely.

  13. Anonymous says:

    yawn…what nonsense. the last thing a bank will ever want to do is foreclose….its a situation where everybody loses…
    but get used to it…winter is coming…

  14. Anonymous says:

    The best ways to slow foreclosures are to pay your damn mortgages and live within your means. Change the rules and everyone else suffers the increased costs to banks, because they sure as hell won’t just suck it up

    • Anonymous says:

      The only people that will suffer are the foreign investors that are looking for a deal on real estate for PR points at the expense of Cayman residents.

      • Anonymous says:

        Certainly the foreign investors who bought in the Seven Mile Beach Corridor the last few years are about to take a major hit on their property values next year. Will be a lot of good deals there for Caymanians as prices drop.

        • Anonymous says:

          Too bad they already blew their pension windfall.

          • Anonymous says:

            Don’t generalise. Lots of Caymanians still employed in the financial sector who have their pension money on the sidelines waiting to deploy it.

  15. Anonymous says:

    By the way, this is what happens when really well paid people in government really really really care about you so much, and did everything to protect you form yourself.

    Be thankful now.

  16. Anonymous says:

    Oh what a shocking surprise

  17. Anonymous says:

    Most banks give ample warning and time for people to make payments. The problem is that people want loans but don’t think they need to repay them. And skipping payments every time an offer is given doesn’t help. It is a bad choice to skip a loan payment if you really don’t need to.

  18. Anonymous says:

    What happens to homeowner equity when the bank sells the property for more than the amount left owing on the house?

  19. Anonymous says:

    So they will talk with you about not having any money to pay them and make sure you are aware of what you are signing before you sign it..

    Should have included a bit that after 8 years any shortfall is erased and credit record restored. The contract where they report your bad credit forever, which amounts to a penalty in itself and opportunities to redeem yourself like any other country. Funny thing is here people just change they name and bank doesn’t know because they track by name.

    So people getting around it after less than 1 year instead of never or 8nas I suggest.

  20. Anonymous says:

    Why not open up like Bermuda and get some money coming in?

  21. Anonymous says:

    How about making the banks refinance homes before whatever contract period is up since rates have dropped and people need that help?????

    • Anonymous says:

      Rates have dropped but with all these skips, the banks can’t refinance because the mortgages aren’t going down. People seem to think they can skip their loans for 6 months without any consequences. People that still have their jobs during the COVID19 crisis should not have skipped their loans. They are the seem ones that will be crying in later years when they can’t pay their loans.

    • Anonymous says:

      So you want a floating rate of interest when interest rates fall? What about when interest rates go up? I guess you don’t want to pay more and that what you really want is an interest rate cap. For free.

  22. Anonymous says:

    Which in turn, will lead to less lending.

    • Anonymous says:

      At a higher cost. If it’s harder for a bank to get it’s money back it’ll charge more for it.

      • Anonymous says:

        Let’s be honest. Banks cannot survive without lending. It’s their bread and butter. If one makes it harder to obtain financing, the other Banks that don’t will see more business.

      • Anonymous says:

        As long as it is fair to the borrower that’s an OK outcome for the country. What is unfair to the borrower and bad for the country (and the lender in the long run) are ‘bad loans’. Where people – for whatever reason – get into unsustainable debt and then lose their homes. (Think the US housing loans crisis that led to so much financial hardship for so many a decade ago.)

        We can argue around the details but if we were/are having a significant ‘bad loans’ problem then clearly the system was/is not working so clearly something needed to change. If it takes less lending, at a higher cost, and then people (developer or individual) building smaller homes to meet that reduced financing availability, then so be it. For me and most people an apartment is (or should be) our ‘starter home’ in Cayman.

        Now, the availability of fairly priced land / starter homes / public amenities for urban/apartment living is a whole other part of this discussion. But better lending practices are not a bad thing.

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