Since the beginning of the year, demand notices have been issued by Cayman Islands financial institutions on 39 properties that hold a total of $8.45 million in loans.
The properties, whether businesses, homes or vacant land, are held in the names of 51 people. At the time the demand notices were issued, they were $839,970.91 in arrears.
Of the properties where loans were in arrears, 17 were in George Town, 12 were in Bodden Town, eight were in West Bay and two were in North Side.
The total of 41 loans for the 39 properties in arrears represents a much larger number than the completed foreclosures reported by Cayman Islands government officials earlier in the year.
However, the government’s numbers were based on a different situation. In the first three months of this year, the government reported that 17 home and business foreclosures had been “completed,” whereas in the cases of the 39 properties, most would not be considered completed foreclosures.
Completed foreclosures include only the cases in which banks have sold the property that was foreclosed on.
The Cayman Islands has recorded 192 completed foreclosures since 2008, according to government records. Another 180 “historical” foreclosure cases involve properties that have not been sold.
In reviewing some of the property demand notices issued by banks in 2015, which are reported every two weeks in the Cayman Islands Gazette, vastly different amounts were owed by each property prior to the demand for repayment.
For instance, in one loan for a property in West Bay, more than $89,000 in arrears was reported on a loan of about $116,500. On another property, also in West Bay, $3,990 was reported to be outstanding on a loan of $136,384.41.
In two other cases, both in George Town, one loan of $190,832.20 was $4,603 in arrears, while another property was nearly $32,000 in arrears on a similar loan amount.
Local attorney Kerrie Cox, who has looked into local home foreclosures, said that without knowing each individual story regarding a property foreclosure, it is difficult to make a determination on the various situations that arise.
“For some people, their circumstances may change over time – whether it be through ill-health, unemployment, divorce etc – which causes them to have difficulties in making the repayments due under the terms of their mortgage,” Mr. Cox said in a letter to the Cayman Compass late last month.
Finance Minister Marco Archer, who has also studied the matter, said recently that the number one reason given by families who lost their homes in foreclosure was the breakup of the family unit. The second most common cause is loss of the homeowner’s employment.
Mr. Cox said the Grand Court has issued practice directions that clearly define procedures to be used in foreclosure proceedings and the requirements banks must adhere to in selling the foreclosed properties. However, he said those procedures offer few options to Grand Court judges in cases where there are exceptional circumstances.
“Consequently, when there are genuine personal circumstances, already anxious homeowners will have the additional worry and concern of losing their homes,” Mr. Cox said.
“In practice, the English courts will often gauge a reasonable period for payment of arrears over the balance of the mortgage term,” he said.
“It is likely that a similar piece of legislation in Cayman – which would extend the discretion of judges in the Grand Court – would assist those borrowers who have had financial difficulties with their mortgages in the past but who could now demonstrate an ability to move forward in paying off their arrears over a reasonable period of time and also discharge their remaining borrowing in a conventional manner. It would not help everybody, but for some, it may provide timely relief.”
As it stands now in Cayman, it is up to individual homeowners to negotiate with their lender.
The increased number of completed foreclosures early this year and in 2013 – when there were 65 in Cayman – is a major community concern. It has sparked the formation of a group known as Caymanians Against Economic Injustice, which has held public meetings on the subject of home foreclosures. The group alleges, among other things, that banks are “rushing through” the foreclosure process – giving homeowners just three months to resolve the issue prior to declaring them to be delinquent and seizing the properties.
Financial Services Minister Wayne Panton has said government representatives would be happy to meet with group members and discuss their concerns, but indicated he did not believe most local banks had been operating in such a “cold-hearted” fashion.