A public push to lobby banks for leniency on home mortgages has led to a legislative effort to change Cayman’s lending rules.
North Side MLA Ezzard Miller said Wednesday that he would bring a private members’ motion in the current meeting of the Legislative Assembly seeking to create a Mortgage Law that would regulate a number of issues related to home loans in Cayman.
Andrea Martinez-Calderon, chairwoman of the group Caymanians Against Economic Injustice, on Wednesday presented her organization’s petition to Mr. Miller, who said he planned to use that document while debating his motion on the proposed Mortgage Law. The group’s petition has seven signatures, far fewer than required to force a referendum.
Ms. Martinez-Calderon said her organization had been trying since last year to raise awareness about a number of home loans going into default that involved instances where foreclosures occurred after 90 days of payments in arrears.
In addition, she said a number of homeowners lost equity in those properties when the banks seized them and sold them at well below market value. Ms. Martinez-Calderon is among those whose home has lost hundreds of thousands of dollars in equity since 2012.
“The issue is that once unfortunate circumstances hit you, they don’t know you, despite all your good payments in the past,” Ms. Martinez-Calderon said. “It’s horrible to lose your home that you’ve been paying into for 13, 15 years.” Government records revealed a sharp spike in home and business loan foreclosures in 2013 and again this year.
Since January, banks have issued demand notices on 39 local properties that hold a total of $8.45 million in loans. At the time the notices were issued, nearly $840,000 in loan payments were in arrears for more than 90 days.
The government reported 17 home and business foreclosures in the first three months of this year, a significant increase over 2014.
Since 2008, the territory has recorded 192 completed foreclosures – properties that were foreclosed on and later sold. Another 180 “historical” foreclosure cases involve Cayman properties that have not been sold.
Mr. Miller’s private members’ motion, which is advisery to the government and not legally binding, seeks to set specific rules regarding how long a lending institution must wait before foreclosing on a property that is in arrears. Current regulations state that foreclosure proceedings may be undertaken 90 days after a home or business loan is not paid.
In addition, Mr. Miller said he envisions legislation that would help protect the equity of homeowners, in particular. He lamented various situations where higher-value homes have been seized during foreclosures and then sold at $200,000 or $300,000 less than the original purchase price.
“These homes must be sold at proper market value,” he said. The ruling Progressives-led government has not commented on Mr. Miller’s motion, but two government ministers have indicated they are investigating the mortgage arrears issue.
Finance Minister Marco Archer said earlier this year that the number one reason given by families who lost their homes in foreclosure was the breakup of the family unit, generally through divorce. The second most common cause was loss of employment.
Mr. Archer and Financial Services Minister Wayne Panton have embarked on a series of public informational meetings in recent months aimed at assisting residents with financial planning. Mr. Panton said he believes local banks will work with local homeowners if they truly fall on hard times and are otherwise acting in a fiscally responsible manner.