Mortgage assistance safeguard revealed

There will be a number of safeguards in place to ensure that the people who receive mortgage payment assistance from a new government programme not only really need the help, but that they pay back the loan. 

Premier McKeeva Bush said his main goal was to prevent people from losing their homes, but he understood there had to be controls on the lending. 

“There is a tremendous amount of safeguards in this,” he said. “If I didn’t put in the safeguards, the auditor general will say I’m doing wrong again and make me look bad.” 

Mr. Bush announced the ‘Save the Mortgage’ programme in December, saying it was designed to help people who were facing the loss of their homes because they could not make mortgage payments. Funding for the programme is coming from $2.5 million that Dart Realty paid to government as part of the ForCayman Investment Alliance deal that will, among other things, lead to the closure of 2,500 feet of West Bay Road, the expansion and enhancement of the Public Beach for continued public use, and the extension of the Esterley Tibbetts Highway all the way to West Bay. 

A press statement issued Wednesday stated that applications for the mortgage assistance programme were being accepted and it outlined some of the safeguards in place for those wishing to receive interest-free loans of up to $20,000 for as long as 50 years to help them save their homes. The safeguards include: 

A letter of employment or a letter from a recruiting agency proving the applicant is actively seeking employment; 

Proof of income through bank account statements for those who are self-employed; 

A certified copy of the mortgage account statement dating back two years; 

A certified copy of identification; 

Proof of home address through a utility bill containing the applicant’s name and address; 

A copy of the foreclosure order or default judgment or demand letter stating the amount of the mortgage arrears, the number of days of delinquency and the names in which the mortgage is held by the bank; 

Written approval from the mortgage holder of its willingness to restructure the loan facility. 

To be eligible for assistance, the applicant must be Caymanian and must occupy the property on which the loan will be made. The applicant must also either be experiencing financial difficulties and received a foreclosure order/default judgment/demand letters or be at least three months delinquent on their mortgage payments.  

Mr. Bush said the programme was available to anyone eligible in any district on all three Cayman Islands. 

“This if for everyone,” he said, adding he didn’t handle any of the process personally, but that it was in the hands of the Save the Mortgage Committee. That committee is chaired by Ministry of Finance Chief Officer Sonia McLaughlin. Other members include Collector of Customs Carlon Powery; Cora Grant-James, the manager of debt collections at Royal Bank; Felicia Galbraith of Cayman National Bank; and attorney Steve McField. 

The applicants and the lender must both agree to the Cayman Islands government taking an additional charge, known in other places as a lien, on the property. Such a charge would prevent any further dealings on the property, including its transfer to another party or further borrowing against it, without consent of the chargees. Charges, which are filed with the Land Registry Department, normally attract a fee of 1 per cent of the loan amount. It is unknown if this fee would be still be applicable for the Save the Mortgage Programme, and if so, if the applicant would have to pay it or if it would be paid by the government and added to the loan. Multiple efforts over two days to clarify that point with Save the Mortgage Committee Chair Sonia McLaughlin were unsuccessful.  

Fidelity Bank (Cayman) Ltd. President Brett Hill said it was in the bank’s interest to work with government in facilitating the additional loans. 

“I don’t see why banks would be against it,” he said. “The bank’s first charge ranks higher than the government’s second charge.” However, Mr. Hill didn’t know what the requirement of having a bank give written approval of its willingness “to restructure the loan facility” meant, if it meant anything more than agreeing to a second charge. Efforts to clarify that point with the Save the Mortgage Committee were unsuccessful. Mr. Hill said the other safeguards seemed reasonable. 

“It seems like [the government] is trying to form a sound basis for choosing people who this programme can genuinely help,” he said. 

Mr. Hill said Fidelity has a number of clients who could benefit from the programme. 

“We’ve got lots of very, very honest clients who cannot pay their mortgage,” he said. “It’s not that they’re bad people; they just can’t pay. Those are the sorts of people who can genuinely be helped by this programme, assuming they can get a job in a reasonable amount of time.” 

One point of concern for Mr. Hill was that values had dropped on many homes during the past few years and, depending on the amount owed to the bank, an additional loan could take the total amount owed above the value of the property. 

The Save the Mortgage programme could also help those who were close to paying off their mortgages when they became delinquent in payments to pay off the rest of their loan, if they owed less than $20,000 including principle, interest and fees. In this case it is assumed the government would take a first charge on the property, but several efforts to confirm this with the Save the Mortgage Committee were unsuccessful by press time.  

If all of the applicants were to receive the maximum $20,000 possible, the programme could help 125 people, based on the $2.5 million allocated. Mr. Bush said not everyone would need the full amount, but he estimated there were at least 300 people who were having difficulties paying their mortgage.  

“I intend to get more funds to help people if we need it,” he said. “We have to do what we can to help these people so they don’t lose their homes.” 

Mr. Bush praised the Dart family for it’s help with the programme. 

“I am grateful to Ken Dart and his family for how kind they have been to us,” he said. “I wish we had more like the Darts in Cayman.” 

Application forms for the Save the Mortgage can be downloaded from the government website or picked up at the reception desk at the Government Administration Building.