Many in government housing in arrears

As of August, half of the people either renting or in lease-to-own contracts for new homes from the National Housing Development Trust are in arrears, according to data presented to the Trust’s board in August. Those people can expect a delinquency letter this week, Trust staff say.

Of the 46 people in the homes, which were completed in 2012, half are considered in good standing. The other 23 people together owe almost $60,000 in back rent or lease-to-own payments, according to data made available through a Freedom of Information request.

The Cayman Compass asked for updated information on the number of people in arrears and how much they owe but had not received that information as of press time.

Julio Ramos, general manager of the Trust, said the organization will be sending out letters this week to people who are delinquent on payments, but the Trust has no plans to evict anyone.

He said some people have “come in at the last minute” to pay past-due balances, but did not provide the updated information.

“Some individuals [think] that because it’s a government entity, they can continue bad habits,” Mr. Ramos said.

George Powell, chairman of the Housing Development Trust board, echoed that sentiment. “Some people have a perception that government’s the last person you pay,” he said. “We need to change that perception.”

By the numbers

The Affordable Housing Initiative has 46 clients in the homes completed in 2012, 20 of whom rent and the rest are in lease-to-own agreements.

In the rental category, 10 people are cited as delinquent in the August report and all together account for more than $32,000 in past-due balances. Just four of those people make up three quarters of that balance, with more than $24,000 owed among them.

There are 26 clients in the lease-to-own contracts and half are in arrears. Again, most of that comes down to four people who owe a combined $21,000 in delinquent payments. All told, of the lease-to-own clients, more than $27,000 in payments are outstanding.

New business model

Mr. Powell, who took over as board chair a year ago, said the Trust is changing how it does business to act more like a bank.

Both Mr. Powell and Mr. Ramos said the organization understands when, in Mr. Ramos’s words, “circumstances change” and people can’t make payments. Now, he said, “The goal of this board is to get people in good standing so they can get funding from banks.”

The National Housing Development Trust board has changed the direction of the organization, Mr. Powell said, adding that he wants the Trust to stop holding mortgages and leases and get those people into traditional financing with commercial banks.

So far this year, according to Mr. Powell, the Trust has transferred 12 homes to bank financing. His goal is to get the remaining 46 homes on commercial mortgages by the end of 2015.

“We need to get people used to the procedures at banks,” he said.

The Trust, until earlier this year, had been charging 8 percent interest on the lease-to-own homes, with payments of $579 a month for two bedrooms to $699 for three bedrooms. The board dropped that interest rate to 5 percent this year to make it more in line with what banks charge.

Mr. Powell said the lease-to-own clients would get an even better rate from banks – some have gotten interest rates of 4 percent and one got 3.25 percent.

Mr. Ramos said the notices going out to delinquent clients this week will state: “All efforts have been made with you” and clients either need to pay the past-due balance or get alternative financing, such as a mortgage from a bank.

“Instead of trying to take the roofs from over their heads, we’re trying to move them to banks,” Mr. Powell said. The notices, he said, will give people 30 days to get people up to date on payments. Neither Mr. Powell nor Mr. Ramos said they would evict anyone.

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