Government pledges to ‘look into’ issue
Homeowners who are simply “giving up” on current mortgages and leaving the Cayman Islands make up the second most common reason for bank foreclosures, Finance Minister Marco Archer said Monday.
“According to the banks, people are just giving up their mortgages and some of them are leaving the islands,” Mr. Archer said. “They would just come into the bank and say ‘here are the keys’ and leave.”
The most common reason given for bank foreclosures, according to Minister Archer, was the breakup of the family unit.
“I was surprised that the main reason [for foreclosures] wasn’t job loss,” he said.
Mr. Archer previously said loss of employment was the second most common cause of property foreclosures, and some of the people leaving the islands in this way may indeed be departing due to job loss or after having reached the end of their term limit on residence.
However, North Side MLA Ezzard Miller said Monday that he was also aware of Caymanians who had left the islands recently, moving to another country in order to collect pensions they earned here prior to retirement.
Both men’s comments came during a debate on Mr. Miller’s private members’ motion seeking to enact what he referred to as “true mortgage legislation” to protect local property owners, homeowners in particular, from losing equity in their investments.
Mr. Miller’s motion suggested there were a number of options to do so, including extending the current three-month period of arrears after which banks may initiate foreclosure proceedings, or even creating some type of reverse mortgage scheme where equity built up in a property can be used to settle debt.
Although the government assented to Mr. Miller’s motion Monday, it did not specifically state what measures, if any, might be taken to change current rules in the Registered Land Law that allow financial institutions to foreclose on a property 90 days after a loan goes into arrears.
Mr. Miller said he left the issue in the hands of the Progressives-led administration: “I have done my job. I have raised this issue.”
After a record year of foreclosures on properties in 2013, during which 65 properties were foreclosed on, concerns rose again this year about the number of properties that had been issued demand notices by lenders.
From the beginning of the year through mid-August, 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.
Financial Services Minister Wayne Panton said earlier this year that 17 properties were foreclosed on in the Cayman Islands during the first three months of 2015. That number over a three-month period compares to 23 completed foreclosures during all of 2014.
During the Legislative Assembly debate Monday, Mr. Panton stressed again that the numbers of foreclosures in Cayman were relatively small in comparison to the averages in the rest of the Caribbean. However, he also acknowledged that for people losing their homes, statistics are no comfort.
“Whether [the economy] is getting better or not … it’s their house, it’s their life,” Mr. Panton said.
The minister urged people with distressed loans or who have suddenly found themselves in financial difficulties to contact their bank as soon as possible to work out an arrangement.
He said there are many options, including temporary measures to hold principal payments in abeyance or even to reduce the overall amount owed per month for a fixed period. However, he also noted that some mortgages cannot be rescued.
“Sometimes the individual involved needs to sell the property, and the sooner they do it, the better,” Mr. Panton said. “We have seen attempts to take government money to give people to pay their mortgages. It doesn’t work.”