Home equity loans may help elderly living in poverty
(CNS): Some elderly people in the Cayman Islands are living in poverty because of inadequate pensions but are sitting on significant equity in their homes. The government has therefore accepted a private member’s motion to consider introducing reverse mortgages to enable seniors to access that capital. Finance Minister Chris Saunders (BTW) told parliament last month that this was not a complete solution or without risks but it was an option that could help some people if the right measures are put in place to protect their homes.
Saunders said the inadequate private pension system was leaving seniors in poverty and things are likely to get worse as some elderly members of the community are living on as little as $150 per month. He said the withdrawal from pension funds during the COVID-19 lockdown and the long freeze on mandatory contributions would bring even more problems for those coming up to retirement, and while real structural changes were needed, this was something that might help in the interim.
Saunders has previously said that government was considering introducing legislation to pave the way for this type of loan, but in this address he said that while the entire pension system was under review, he was focused on making the Cayman Islands Development Bank “more like a development” bank. “Doing nothing is not an option,” he said, noting that Cayman has an ageing population as he gave the government’s backing to the motion brought by backbench MP Dwayne Seymour (BTE)
Seymour said that offering reverse mortgages or releasing home equity would offer some hope to those who are really struggling. He explained that in the United States and the United Kingdom there are various products, but most are loans made against the equity in a home, some of which do not require full payment until after the owners die when the property can be sold.
Opposition Leader Roy McTaggart warned that this was not a panacea and there were many “real dangers” with these types of products. Noting that many people in other jurisdictions had lost their homes as the equity can be eaten up quickly by interest, he advised the government to seek out the best advice on creating the necessary bespoke legislation. He said there were “many pitfalls” that would need to be addressed to protect the elderly and their homes.
“The last thing we would want to do is introduce something that people don’t understand and rush into,” he said. He added that the opposition backed the motion, but he wanted to ensure that the government got this right.
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This is another one of those hair-brained ideas ( like the one about going up to 30stories) that is not well thought out without showing the clear implications of this on our society.
Effort should be made instead on creating a proper Mortgage Act that protects consumers instead of the dreadful demand loan situation we now have which is not a true mortgage. And while they are at it remove the automatic base rate system that is tied to the Fed without any real basis or justification when we have a separate economy.
A trend that we all know is occurring in the Cayman Islands, but that neither the government nor the people are raising alarms about, is that an increasing number of adults are living with their parents. Some are not able to leave the nest due to economic constraints, others–forced by the same constraints–are moving back in with their parents, often with family, including children, in tow.
Adult children in the household can either be a nice help or a terrible drag on the parents’ resources, depending on if–and how much–those children contribute to their parents’ household expenses.
Inflationary pressures and the rising cost of living, the rising cost of rent, and the rising cost of acquiring their own homes will no doubt see an increasing number of adults either not leaving or returning to the “nest”. The rent crunch crisis and the exorbitant cost of acquiring their own homes is leading us to a cliff on this issue. We all know of at least one–and often more than on–instance of adults living with their parents. Yet we do not hear of our feckless leaders tackling the issue.
Should we adopt reverse mortgages, some parents of these remain-in-the-nest adults may have no choice but to take out a reverse mortgage in order to support themselves and the rest of the nest. This issue is a HUGE red flag and absolutely needs to be discussed in conjunction with how best to help our elderly. All too often, the elderly and their adult offspring are combined into one needy package and this will become ever more so as time goes by.
In July 2022 in the USA, half of adults ages 18 to 29 were living with one or both of their parents, according to Pew Research Center analysis of monthly Census Bureau data. Has our government done any recent studies on this issue? If they have not, they are breathtakingly irresponsible and well deserve the Clown Car moniker.
Before our leaders even begin to think about reverse mortgages, they need to have a deep look into this very significant issue! The figure needs to be broken down into two categories that define who are in need in instances of adults living with their parents: The parents? Or the adult children? For at issue, too, is the number of parents who have little alternative but to live in their adult children’s households. That is another factor that plays into the question as how best to assist our aging population. So, PACT…get to work! You have a lot of questions to answer.
(I hope I opened some eyes ‘roun yah!)
A comment @ 21/12 2:08 makes mention of the outrageous nature of the bank fees we face at every turn with commercial banks here.
It is beyond merely outrageous, it is outright evil, legal thievery!
Banks use your money to make themselves money and then they charge YOU to use your own money.
These greedy money-grabbers are the same institutions that government would entrust to handle reverse mortgages. I say, NO WAY!
The Panton-PACTless Clown Car Government spouts about putting robust measures in place to protect borrowers involved in reverse mortgages. However, if Government’s performance in protecting consumers from the banks’ predatory practices is any indication of what we can expect, the promises of protection they spew are nothing more than putrid tripe.
Are these outrageous fees you speak of new and only in place since the PACT government? You know the answer. So did you curse the previous government for not doing anything about the same fees?
@11:25:
Yeah, the previous government were just as worthless at regulating banking thieves as the group of do-nothings we have in power now. But they are history now, Bobo. The Clown Car rolled in to power and they are the ones touting reverse mortgages. I say No Damned Wayy! Not until they get the banks under consumer protection controls.
I shall repeat for the s-l-o-w class, and add a bit for clarity: If THIS Government’s performance in protecting consumers from the banks’ predatory practices is any indication of what we can expect from them in regard to reverse mortgages, the promises of protection they spew in regard to reverse mortgages are nothing more than putrid tripe.
(We clear now, Bobo?)
I’ve cursed at them all over the years with the same results. NOBODY LISTENS!
OR better yet……..any elderly person with a house willing to enter into a lease to own agreement with me?
You’ll get to live in the house for the rest of your life and I’m very good at caring for the elderly so you’d be extremely comfortable.
Obviously you must be of sound mind to be able to enter this contract.
For those of you who do not know what a Reverse Mortgage is:
A reverse mortgage is a type of home loan that allows homeowners to borrow money against the value of their home WITHOUT having to make regular monthly payments. Instead of making payments to the lender, THE LENDER MAKES PAYMENTS TO THE BORROWER, who can receive the money in a lump sum, as a line of credit, or as a series of monthly payments. The loan is called a “reverse” mortgage because the borrower is receiving money instead of paying it out.
Reverse mortgages are typically only available to homeowners who are 62 years of age or older and who have substantial equity in their home. The amount of money that a borrower can receive through a reverse mortgage depends on the value of the home, the borrower’s age, and the interest rate on the loan.
Reverse mortgages can be a useful financial tool for homeowners who are retired or on a fixed income and who need additional income to cover their expenses. However, they can also be complex and expensive, and it is important for borrowers to carefully consider the terms of the loan and to seek independent advice before entering into a reverse mortgage agreement.
Common Issues with Reverse Mortgages:
There are several potential issues that homeowners should be aware of when considering a reverse mortgage:
1. High fees: Reverse mortgages often have higher fees than traditional home loans, including origination fees, closing costs, and mortgage insurance premiums. These fees can add thousands of dollars to the cost of the loan and reduce the amount of money that the borrower receives.
2. Interest: The borrower is still responsible for paying the interest on the loan, even though they are not required to make monthly payments. The interest on a reverse mortgage can accrue over time and be added to the balance of the loan, increasing the amount that the borrower owes.
3. Repayment: Reverse mortgages become due and payable when the borrower dies, sells the home, or moves out of the home for an extended period of time. The borrower or their heirs must repay the loan, including any interest that has accumulated, in order to keep the home. If the home is not worth enough to cover the balance of the loan, the borrower or their heirs may owe more than the home is worth.
4. Loss of equity: Because the borrower is receiving money from the lender rather than paying money to the lender, the amount of equity that the borrower has in the home may decrease over time. This can be a concern for homeowners who are planning to leave the home to their heirs.
5. Counseling requirement: Federal law requires that borrowers receive counseling from an independent third party before obtaining a reverse mortgage. This is to ensure that borrowers understand the terms of the loan and the potential risks and benefits.
It is important for homeowners to carefully consider these and other potential issues before deciding whether a reverse mortgage is the right financial option for them.
Things the government should consider when looking at allowing for Reverse Mortgages:
There are several protections that governments can put in place to protect applicants from unscrupulous lenders:
1. Regulatory oversight: Governments can establish regulatory agencies to oversee the financial industry and ensure that lenders comply with fair lending practices and consumer protection laws.
2. Licensing requirements: Governments can require lenders to be licensed in order to do business in a particular state or jurisdiction. This can help to ensure that lenders are qualified and adhere to certain standards.
3. Consumer protection laws: Governments can enact laws that protect consumers from predatory lending practices, such as charging excessively high interest rates or fees, or making false or misleading statements.
4. Education and resources: Governments can provide education and resources to consumers to help them understand the financial products and services that are available to them and how to make informed decisions.
5. Complaint resolution: Governments can establish mechanisms for consumers to file complaints against lenders and seek resolution if they feel that they have been treated unfairly.
It is important for governments to take steps to protect consumers from unscrupulous lenders in order to ensure that financial markets operate fairly and transparently.
I have recommended this to few retired Caymanians, not with Bank or private finance people but with their Kids or Grand Kids…
It works!!!!
Let all the MPs take a 30% pay cut on their bloated wages and plough that money back into the senior’s pensions. There isn’t a SINGLE MP who doesn’t have other business interests or other incomes.
So much for generational Caymanians looking after one another. Greed has slowly destroyed the Cayman Islands.
Anything to avoid dealing with the problem directly. The Cayman pension scheme is a fiasco, always has been. There are plenty of plans that work well but you would not think of copying them because Cayman is “special” and must have a special plan that ends up benefitting only the plan providers. Every. Single. Time. Just like the local bank regulations. Meanwhile half the commenters have no idea what a reverse mortgage is or how they work. Based on this, you can count on any government reverse mortgage scheme to be a giant mess right from the beginning.
What is not being brought to light is that in the USA, reverse mortgages are used by only a tiny percentage (in most states usually 3% or less) of eligible persons. And that is in spite of intense advertising and promotion of reverse mortgages. I should suspect one reason for this is that most retirees are covered under Social Security or other retirement income plans. However, that is still a low number.
Just asking for a friend. Why can’t government extend the retirement age? I know of some elderly people who would come to work most often than the young ones that are now employed. I believe once you are capable and of sound mind you should be given the opportunity to remain employed. Obviously some of the company benefits could be tweaked to ensure the relationship is beneficial to the company and the elderly.
20 @ 8:06 pm – Government raised the retirement from 60 to 65 just a few years ago. Where were you, or do you expect such a significant legislative move every couple years??
I think 60 was way behind the times and I think the point was to move it from 65 to 70 for those who are willing and able.
50 years ago 65 was considered old. Many people didn’t live long into retirement. Today many people are quite capable of working into what was once old age.
100 years ago and more recently in Cayman your didn’t actually “retire” your worked until you couldn’t anymore.
Yes, but some businesses (like law firms) are still ending normal employment contracts at 60. After that, they either kick you out the door or put you on a year-to-year contract at their whim. And it’s through the company.
Just saying people are living longer and are capable beyond age 65. Why send them home sit on their hands and remain on NAU for rest of their lives? Lets be realistic most retirees obtain $750 per month. This barely meets the minimum expenses such as electricity, phone, tv and food. This doesn’t include property, life insurance premiums and car expenses. From day one the pensioner is scheduled to fail and become dependent on NAU. Just maybe if government can reduce the NAU payouts, then they can reduce import taxes and things could be a lot cheaper on island and everyone benefits.
They changed it from 65 to 66 as well.
I like work and want to work till I’m 75. People shouldn’t be written off based on age.
I hope the banks police this product properly to ensure the elderly are not harassed by family members begging for funds to import vehicles or to pay their bills and living expenses. Then you have elderly spending the money foolishly to support their children’s children while the parents shack up at the Kimpton every long weekend.
You hope THE BANKS “police the product”? Seriously, 7:57?
Allowing the gluttonously avaricious banks to police themselves would be tantamount to having a crack dealer guard the police drug evidence storage room.
A pension of 150$ a month ?
Wow, in the meantime, Eden, Tibbets and Bush raked in 1000’s a month while double dipping with their pension. A rule these people have instated themselves, while normal people are suffering.
The trick of course is to say god gave it to them….
Typical caymanian stupidity.
You get the government you deserve.
Who benefits most of this plan ?
Little known to most Caymanians is that the Cayman Islands Government has long had the legal foundation in place for the government to be the originator and holder of what amounts to be reverse mortgages.
It provides that the real or personal property any recipient of “relief” for the “poor” shall vest in Crown. According to the Law, The criteria for such relief may be specified by the Governor in Council (Cabinet), which “…may, from time to time, make regulations embodying the conditions under which relief may be given.”
Excerpted from the Law>>>
The POOR PERSONS (RELIEF) LAW
(1997 Revision, provides for the following:
Definitions
2. In this Law —
–“relief” means the relief given under this Law to needy, destitute and sick persons out of such moneys as may be annually voted by the Legislative
Assembly for that object, and includes all burial expenses;
–“poor person” means any person who is or has been in receipt of relief and has not reimbursed the same, but does not include any person who has been in receipt of any special extraordinary relief voted or granted to such persons on account of any loss or destitution, as the case may be, occasioned by fire, storm, pestilence or famine.
CLAUSE 4
Poor person’s property to vest in Crown:
4. In the event of any poor person in or coming into possession of any real or personal property, such property shall vest in the Crown and it shall not be lawful for the poor person, so long as he continues to be a poor person, to dispose of or otherwise deal with the same without the permission of the Governor.
CLAUSE 5
5. Property may be disposed of in certain events:
In the event of the death of the poor person, or his absence for six calendar months from the Islands, or if the poor person has ceased to be in receipt of relief for a period
of two years and has not within that period reimbursed the amount of the relief previously received by him, the Governor may dispose of the property by public auction or otherwise as he may think best, paying the proceeds into the Treasury: Provided that should the Crown, at any time before the property is disposed of, be reimbursed the amount expended on the relief of the poor person, the Governor shall release the property and take no action for the disposal of the same:
Provided further, that should the property, if disposed of, realise a greater sum than the amount expended on the relief of the poor person, the balance after deducting the amount expended, shall be returned to the poor person, or, if he is deceased, to his executor or administrator.
Given that this is already a law, the Cabinet need only to simply flesh it out so that government becomes the originators of the equivalent of reverse mortgages. This could take the lender profit out of the equation and make the Secured Monetary Advances (SMA’s) more practical. (Secured Monetary Advance is my proposed name for the vehicle.) I can also see the potential need for some amendments, but the basic law is there.
I envision many ways in which such a program could be made to protect, enhance, and even expand Caymanian ownership of property rather than threaten it the way commercial mortgages might tend to do. The key phrase is in the clause that gives the “Governor” discretion in the disposal of a property. Cabinet could specify that the competition for an auctioned home property is open first only to Caymanians. The first auction is open only to Caymanians who do not already own a home. The unsold homes can then go to a wider auction open only to Caymanians. All other properties can go into auctions open only to Caymanian individual real persons, not corporations. A property is never offered at auction to the general public unless and until the property is offered to solely to Caymanians for a certain period of time and no offer from Caymanian persons are forthcoming. There are many other ways that such a program may enhance Caymanians retaining property ownership.
The current Poor Person’s Relief Law in its entirety may be found here:
https://cnslibrary.com/wp-content/uploads/Poor-Persons-Relief-Law-1997-Revision.pdf
About to be repealed by the Financial Assistance, 2022, not in force yet, presumably waiting for regulations to be drafted.
See here http://gazettes.gov.ky/portal/pls/portal/docs/1/13210559.PDF
Cayman is lacking all kinds of basic banking regulations, products, in addition to client-centric service. Every new sub-product requires a full application like you’re a new walk in relationship they’ve never met!
It’s literally decades since I had to visit a branch in the UK, all my banking is online and ATMs and most of it is FREE. The fees here are also outrageous, particularly at the ATM.
Yep. Haven’t been to a branch in the UK since the 20th century. (First direct). Banking here, like in the US, is seriously backwards, slow and expensive.
Nice way for the Greedy to steal the elderly peoples homes
yep. avoid at all costs. government sponsored scam
Exactly.
Picture your elderly loved ones who own their own home but struggling to exist. You have only enough to support your own household but not enough to assist your needy parents.
A reverse mortgage when properly and ethically done is a way for them to live a life with some dignity. Why would you deny your parents this option? Could it possibly be that you are counting on inheriting the property for yourself on their demise? If so, I think YOU are not only greedy but selfish as well. Just think about it before you condemn and accuse people of “stealing”.
Perhaps one avenue to assist needy elders is to strengthen the provisions contained in existing laws:
The MAINTENANCE LAW (1996 Revision)
in clause 5 makes children responsible for maintaining their elderly infirm parents:
“Duty of children to maintain parents:
5. Every person born in wedlock is hereby required to maintain his or her father and mother, grandfathers and grandmothers, and every person not born in wedlock is hereby required to maintain his or her mother, the person registered as his or her father, and if there be no person so registered, the man, if any, with whom his or her
mother openly cohabited at the time of his or her birth, provided that such man recognised and treated such person as his child during his or her infancy, in case such father or mother or other person as aforesaid, or all or any of such persons are unable by reason of old age, or bodily or mental infirmity to maintain himself,
herself or themselves.”
The enforcement of this law is up to the respective parent, as per Clause 6:
“Method of compelling performance of duties imposed by this Law:
6. Any person entitled to be maintained by any other person or persons under this Law, and any person having the actual care and custody of any child so entitled, may, in case the person or persons by whom such first mentioned person or such child is entitled to be maintained or some or one of them shall fail to maintain such person or child, make a complaint before any Justice, who shall thereupon enquire into the case, and if it shall appear to him that the complainant, or the child on whose behalf the complaint is made, is entitled to be maintained by the person or persons complained against and that such person or persons have neglected to comply with the requirements of this Law, he shall summon such last mentioned person or persons to appear before the summary court at a time and place to be
named in such summons, to answer the matter of such complaint.”
I propose that the Law be amended to allow the Department of Family Services Needs Assessment Unit (NAU), when an application comes in for assistance from a needy person, that the NAU do a thorough investigation as to whether or not the applicant’s children are living up to their responsibility under the law, and if not, the NAU can file a complaint. Note that under that law not only the elderly are due support from their children. I further propose that should reverse mortgages be allowed, that all applications for reverse mortgages be subject to scrutiny to ensure that the need for the mortgage money is not because the children are deadbeat scofflaws neglecting their needy parents. If such neglect is found to be the case, then the deadbeat children must be held responsible.
If all persons in this land did their part to care for the elderly and the needy, and if all so-called Christians warming comfy pew seats on Sunday lived up to their religious, moral and legal responsibility, there would be little need for reverse mortgages in the Cayman Islands.
Take your maintenance law and stick it where the sun doesn’t shine. I will take care of the mother who raised me, but the sperm donor who never once in his life did anything for me, or any of his other children, will have to depend on the people who think it’s a good idea to write such laws.
@4:41:
You apparently did not read and understand the law, but you are quick to be critical of that which you do not understand. Or perhaps you are just too careless and irresponsible to try to grasp issues before you go off on a tirade.
In section 5 it reads and I excerpt:
“5. Every person born in wedlock is hereby required to maintain…the person registered as his or her father, and if there be no person so registered, the man, if any, with whom his or her
mother openly cohabited at the time of his or her birth, provided that such man recognised and treated such person as his child during his or her infancy.”
Thus, if the man “never once in his life did anything for” you, then the law obviously does not apply.
Are the gaps in your comprehension filled in now?
In some Asian countries, it is an untold duty of the children to take care of their parents in old age, and the children do it happily. May be because growing up they have seen how their parents brought them up lovingly and put the children’s need before their own!
@8:49:
In days gone by, that used to be the case in the Cayman Islands. Family took care of family.
Yes put your home in debt so you can live good for short while then when first repayment is overdue bank takes it and sells it to there fellow countryman Win Win situation for foreign Buyers who buy it for what is owed .Don’t let dem Fool ya Cayman Tell the con man and his con plan to Go Weh !
@12:53:
The “first payment”, as you call it, does not become due until the borrower either dies or no longer permanently resides on the property. The borrower benefits from the use of the money, and enjoys the use of the home during their remaining lifetime.
Reverse mortgages are a scam for seniors to lose their homes. My late Aunt in Florida fell for one of these “programs” in the USA. She lost her home which she’d owned for decades and ended up living with her daughter until she died heart-broken.
NO Reverse mortgages for Cayman, banks already have enough leverage!!
A reverse mortgage is really nothing more than a regular mortgage or a loan against your home. Of course you can lose it if you don’t keep up repayments. You’re missing out the part where she got a huge cash payout at the beginning.
@3:-15 pm
You forgot to mention interest rates going up which then changes the principle amount borrowed. I don’t think the banks are going to lend it with terms of balloon payment. Then the equity decreases and the banks start hounding the poor old lady sitting in her rocking chair with her wheelchair beside her.to inject the money back into the mortgage to decrease the principle to bring it in line with the equity.
Usually the interest rate in these products is “fixed” for life, another safeguard that needs to be built in
@3:15:
In the USA, commercial banks have been backing out of the reverse mortgage business for some time after the rules changed. Now the market is served predominantly by companies specialising in reverse mortgages. The lenders absolutely DO lend with no payments due until the person either dies or no longer ordinarily resides at the property. No poor old lady is “hounded” to inject any sum towards repayment.
Except the catch is that usually no repayments are required, so interest compounds, so it is in the borrower’s interests to at least pay the monthly interest, but if a persons actual income is less than the interest due then the only way to do that is use the capital from the equity release to pay the interest which makes no sense.
@11:08:
Don’t know about your Aunt, but the way the vast majority of reverse mortgages under current Florida regulations are set up is that the borrower makes no payments on the loan and the loan is not due until the person’s death or they no longer ordinarily reside at the property. They may enjoy the use of the property for their lifetime without making any mortgage payments. They must pay the required insurance and do ordinary upkeep of the property.
As for “banks”. Commercial banks in Florida have long been walking away for doing reverse mortgage business. It is now serviced by specialty companies specialising in such lending.
Reverse Mortgages might make sense if the Cayman Islands had basic consumer protections and laws to regulate predatory banking fees and margin rates, but we have neither those, nor the level of sophistication (at highest levels) to understand they are missing. Our leadership fails to realize that the class A banks serving are all foreign owned, drawn to Cayman market participation specifically for its lack of regulatory consumer protections, with established track records of fee gouging.
So unable to find any income generating infrastructure or societal development projects that a “development bank” would normally finance, the idea is now to get CIDB to get into the reverse mortgage market? Even though they have no expertise in mortgage banking, and no infrastructure to police the risks? So the government will claim to be helping seniors by lending them funds against their homes on no doubt sift terms, and almost certainly without any fear of ever enforcing the mortgage. You see the public backlash the commercial banks get for foreclosure; can you honestly imagine a Cayman politician ever having the spine to take a property after the death of the mortgagee and deal with their relatives ire? You may as well say they are giving free loans to any Caymanian over a certain age who is a home owner.
@10:51:
Contrary to your misinformation, the CIDB is involved in mortgages. I know more than one person who obtained mortgage funding through CIDB.
You people who go off and comment in total ignorance are beyond belief.
Here is the link to a description of the the CIDB HOME MORTGAGE programme:
https://www.cidb.ky/services/home-mortgage-loan
But what do they know about reverse mortgages?
The phrae in the article that should send up red flags in the minds of all readers is this, speaking of McTaggart’s support of the concept of reverse mortgages for the desperate: “…but he wanted to ensure that the government got this right.”
Do we really want to trust government with the legacy inheritance of the Caymanian people?
Putting in place a policy that combines greedy banks with government carelessness and ineptitude and the likelihood for disaster is immense.
What’s next? Voluntary euthanasia?
What’s wrong with voluntary euthanasia? That’s a much more sensible discussion to have than this predatory nonsense.
It is the ex civil servants who are getting the 150.00 from govt. pension, not private sector sir. Alot are ex police too so if u need to hire them again. Start with Govt.pension for us
I have long advocated that the most practical and risk-free solution to assisting the poor in the Cayman Islands is the establishment of a system of micro-industries modelled on what Mohammed Yunus has done in Bangladesh.
CNS: The rest of this comment has been posted here.
Mr. Bodden,
Yours is one of the most significant Viewpoints I have read here in quite a while. I would strongly encourage readers to click on the link provided by CNS below your comment and read what you have to say.
Your promotion of micro-loans for micro-industries was dismissed by pompous self-aggrandising idiots who, if you could buy them for they are worth and sell them for what they think they are worth, you could make a fortune. Sadly, each election cycle, voters manage to yet again empower a sizable cadre of that class of idiots.
This will ensure that the last of the Caymanian property owners lose what they have. Eventually caymanians will own NOTHING in our own country.
Why you think certain leaders are suggesting this foolishness 5:41am and their compadres will be the sole benefactors of this scam. Look around at who on this island is hogging up every thing and every little piece of property disenfranchising and displacing our young people and yet they again are in charge of Immigration and granting rights to others who clearly need to go HOME! Cayman is in a real terrible mess though !
Coz they love selling it.
*Coz they are forced to sell it by gentrification of their island, foreign investors buying million-dollar condos unseen, ultra-wealthy immigrants flocking to one of the safest locations on the entire planet and driving up prices of everything (the greedy resellers are not innocent either – Caymanian and immigrant alike). This “home equity loan” push being the way to get their hooks into the few Caymanians that have managed to hold on this long.
Fixed that for you. Don’t be embarrassed; it appears to be a common typo as of late.
@5:41:
Your assertion is somewhat misled.
Assuming that the Caymanian property owners of whom you speak are elderly and in need, and assuming they have heirs, for if not, the Crown would end up with the property, then it is safe to say that those heirs did not provide sufficient care for the elderly property owner and the needy ones chose to take out a reverse mortgage. The property owners did not “lose” anything as they can occupy the reverse-mortgaged home until they die. In my opinion the Caymanian heirs lost any moral rights to inherit the property if they did not try their best to support their needy relative. In days gone by, family took care of aging family. If Caymanians no longer want that to be norm, then the void will be filled by others; in the case of reverse mortgages, those “others” are the lenders.
Preachers spout fiery rhetoric condemning strong drink, smoking, alternative sexuality, and other sins. I wonder how many of them heap shame upon members of their congregation who make a fairly comfortable living and whose parents are on the dole or otherwise in need?
Absolutely no way. Banks are in business to make money they are not a charity. This will just see to it that our senior citizens will be ripped off right up to the grave. The pension fund is inadequate and this lies squarely with the government. Fix that, and up retirement age to 70 for a start.
You really should not make finance policy proposals based on the advertising you watch on late night cable TV.
Assuming the banks here can structure a product that isn’t a complete rip off (ok I know but it’s possible), why shouldn’t the elderly live out their lives in some financial comfort?
It’s their wealth, it’s just useless to them! Pretty obvious everyone waiting for grandma to die to get rich are going to come up with every reason in the book why this shouldn’t be allowed…
and what happens when granda spends all her equity and still is alive and now without a home? hmmmmmmm
NAU covers all of her expenses for 5 years instead of 20.
@8:46:
Factor the cost of housing into the equation and you are almost back to square one.
So many of the Caymanian/Caymanian Status Holders are already on NAU, and I understand the list keeps growing, exponentially. The elderly (over age-60) & adults under age-30 seem to be getting hit the hardest.
Have you ever visited Credit Union & observe the amount of micro-loans & salary advances the Government Employees & Pensioners are applying for, because of the high cost of living on these Islands?
…and, Reverse Mortgages are high-risk, “garbage” Contracts.
If someone had capital they are not in poverty. They just choose not to liquidate assets.
All too often those assets outside of the primary residence are in “family land” estates that will require the outlay of a goodly sum of money to pay an attorney to settle the estate so the heirs can sell their share.
If you have multiple properties and generational ownership strategies for investment land you are not living in poverty. You are in fact quite wealthy.
hey pontious pilot! yea …i talking to ya all….billionaires owning everything is the biggest problems…they will just continue buying….but might as well talk to a door knob!
Bad idea, simple as that.
I suppose it could work. As a safeguard, every reverse mortgage should be registered with the government, and audited by one of the major accounting firms (government can pay the tab since they will benefit) to insure that the deal is fair to both the property owner and mortgage financier.
That’s not what auditors do, bubba.
I wasn’t aware that auditors did anything.
Exactly! They are useless.
Case in point, the same Auditors that were responsible for conducting annually audits on C.I. Employees Private Pension Plans across the Cayman Islands (C.I.).
@10:06:
Auditors audit. Any person with even a rudimentary grasp of maths can tell from the annual reports and their own plan’s statements that the current pension schemes are very beneficial to the funds managers, not so damn beneficial to the pension plan owner/contributor. A really sorry state of affairs!
Let’s give older persons living in poverty money based on the equity in their property. What could go wrong?
Suppose the aim here is to ultimate take these properties away to pave way for new development.
These home equity release products are mostly a scam, and lead to terrible outcomes for the home owner or their family. Please don’t allow those sort of companies to do business on the island. Once again it will be all about making profit from the poor instead of actually helping them.
Well if there is no children to leave the property to then who cares. If there are children then perhaps they should help care for their poor parents instead of letting them rot and hoping they kick the bucket so they inherit an undeserved windfall!
First step is to change definition of “banking business”. CIMA is helpless until CIG has proper legislation. Lending money is not banking business and a lot of investors operate in this unregulated space.
…unregulated, like crypto currency. FTX comes to mind. OneCoin comes to mind. Binance comes to mind, etc. etc. etc.
…’Celsius’comes to mind😂 and the ‘Midas’ touch, as well.
Beware, it is really important to understand compound interest with products like these. Offered as if “free money”, the interest adds every month if you don’t at least make a payment that covers the monthly interest. Then there is interest on the interest.
Also usually a lot higher interest than a conventional mortgage. EG if you borrow $80,000 at around 6% over a “life term,” which is what these models usually offer, after 25 years you would owe around $450,000.
However if you pay the monthly interest, if the model allows you to do so, you would pay about $400 a month, ($120,000 over 25 years) but still “only” owe the $80,000 at the end, usually when the borrower dies or needs residential care. If you pay the interest monthly and pay off in total At the end of £25 years the total is around $200,000, pay no interest and the amount you owe more than doubles at the end. It is less of course if you pay off earlier, after 10 years you would have a debt of about $215,000 if you pay no monthly interest payments. Approximately $15,000 more than if you pay monthly interest. Obviously the extra interest gets great and greater the longer the term.
I believe in about 10 to 15 years time in the U.K. and the US thousands of people will find that an inheritance they thought was coming will be swallowed up because of these loans. I am not saying they don’t have a place, and a use, but it is in the lenders interest for you not to pay the monthly interest, so safeguards need to be built in to make sure anyone taking our an equity loan understands the implications completely.
My workings out are only approximate, but pretty close to reality.
Most reasonable comment here.
Some other commentors need remember that not everyone has children, or children who can be bothered to help out. NAU cannot continue on its current course ad-infinitum!
There is a place for this type of loan, with proper education and proper safeguards.
Cayman doesn’t do “proper safeguards” as they are perceived to be anti-business by taking into account the needs of consumers/prey. Our banks aren’t even Caymanian-owned anymore, and still no legislative guardrails on margins.
You make some good points but ignore others. By the way, I make $80,000 loan over 25 years at 6% interest to grow to $343,350 if there are no repayments.
If the purpose of a home equity loan is to supplement income then paying the interest every month doesn’t work so well. I have however seen Home Equity loans which do not (or need not) lend a lump sum, but lend a monthly income. This reduces the size of the loan considerably compared to the lump sum variety, and also avoid the risk of greedy children pressurising their old mom or dad to take out a loan (which they want passed to them straight away).
Many also have a “no negative equity guarantee” meaning that the loan can never grow larger than the value of the property, leaving a debt on the estate.
The complaint often levelled at such schemes is that the children may receive little or no inheritance, but I would counter that by suggesting that if the children helped more with their elderly relative, a Home Equity loan would not be needed.
In my opinion, Home Equity loans are mainly for the particularly elderly or infirm, as they have no realistic means of obtaining earned income. In practice, such loans are mostly taken out by a people age (say) 75+, so the number of years for the loan to grow is likely to be shorter than 25. Overall, if they are set up with fair terms and offered subject to regulation, without fat commissions, and only after sensible checking of the circumstances of the applicant, then they can be an extremely useful tool to allow income-poor individuals their dignity in later life.
Yes I agree my model was a bit out maths-wise, but you and I agree, there IS a place for such schemes, they can be useful, but must be well regulated. The borrower must be made aware of the potential pitfalls and costs.
Or their greedy children could help them.
Here’s an idea, open the flood gates with no specific anti-monopoly/majority controlling interest regulation. This will ensure that the majority real estate owner on the island can realize his masterplan sooner. It’s the final sellout if left in the wrong hands. No doubt many politicians will be scrambling to set up their own private home equity loan rackets too.
Great, now Seymour is an economist. We have nothing to worry about.
Please CNS bring back the LOL button. Please Please Please.
his will be good for a certain high dollar investor/developer because he can scoop up loads of delinquent mortgages and properties. Good call Honorable Saunders
Caymanians have already sold all of their generational property holdings to developers. Now you want them to give up their homes? This is a surefire way to guarantee a new generation that has nothing, no inheritance or land to build a future. May as well get in line now at NAU.
You will own nothing and be happy about it peasant!
@12:06:
If the new generation does not want to do their part to provide for the old generation, then they deserve to get what they contribute: nothing.
Just simple math, bobo.
These guys are idiots…..they give themselves raises to help with these hard times but tell us to draw on our pensions and home equity…meanwhile they are getting record permit fees from illegally ignoring Caymanian immigration safeguards….they are truly stupid greedy pigs.
So you are just finding this out? Been business as usual for the whole bunch of politicians for years now. They and their buddies will always come first and the hell with everyone else.
And they have now identified a national lottery – taking money from the poorest sector of society through legalised gambling – as the next money spinner (Saunders estimates exceed current WP income)
yawn…it’s called means testing. it’s what you need to do for everybody living on cig handouts.
way too many people sitting on valauble assetts while still receiving cig money….