Amid public concern over rising foreclosure rates in the Cayman Islands, a judge has cautioned home owners to understand they risk losing their property if they fall behind on mortgage repayments.
Justice Richard Williams advised that banks could and should seek to work with homeowners where possible.
But he warned that anyone with a mortgage has a personal responsibility to ensure they understand what they sign and that banks have a legal right to repossess their home if they consistently fail to make their monthly repayments.
He was speaking as he delivered his ruling, Friday, in the case of Gregory Watt, a homeowner who has become the focal point for community anger over home foreclosures, which statistics from the Cayman Islands Monetary Authority and from the Cayman Islands Real Estate Brokers Association show have been increasing since 2008.
After a court hearing, last week, Mr. Watt was ordered to vacate the property within seven days.
Justice Richard Williams ruled that Scotiabank was within its rights to confiscate and sell the home in Lower Valley because of his consistent failure to catch up with his monthly repayment schedule.
He ordered Mr. Watt to hand over the keys by noon, Friday, so the sale could be completed.
Though he had paid $66,000 over the course of five years toward the mortgage and was ultimately only around $3,000 behind on his payments, the judge acknowledged that the bank had offered him numerous chances before moving to foreclosure.
He said the facts of the “sad and unfortunate” case had been misrepresented in a social media campaign.
“This is not simply a case involving arrears of just over $3,000,” he said.
“One must have regard to the history of non-payments and the attempts by the bank to work with the defendant over a four-year period.”
Over the course of a two-day hearing, held, unusually, in public, at Mr. Watt’s request, the court heard that he had fallen behind on his mortgage repayments within months of signing the agreement for the $180,000 home in November, 2012.
Though the bank and Mr. Watt arranged numerous repayment schedules, he remained in arrears, fluctuating between $3,000 and $6,000 over the next four years, until the bank lost patience and moved to foreclosure.
Justice Williams said Scotiabank had sought to work with Mr. Watt and had renegotiated after three previous foreclosure notices and offered him numerous other opportunities to clear his debt.
He said, “The account has been in arrears for a considerable period of time with a history of inconsistent payments spread over a four year period, a pattern which started only a few months after the charge agreement was made.”
He said the bank had acted in good faith and sold the property at market value, $210,000, as determined by an independent valuation expert.
According to statistics from the Cayman Islands Real Estate Association there were 112 foreclosure sales in the Cayman Islands in 2016 and 116 in 2015 – up dramatically from 30 in 2011.
Statistics from the Cayman Islands Monetary Authority also indicate that foreclosure rates have been steadily increasing since 2008. According to the CIMA data, 2.37 percent of the total dollar value of residential mortgages were classified as being in foreclosure at the end of 2016 – up from 0.22 percent in 2008.
Addressing public concerns about foreclosures, the judge said.
“The court recognizes the current genuinely held concern in the public domain about the security of homes which are subject to a mortgage arrangement with a lender, especially at a time when persons may be experiencing employment issues and a downturn in their income.”
But he said it was up to individuals to read and understand the terms of their mortgage agreements and seek legal advice if necessary before they sign.
Anyone who borrowed money against their property and did not make payments as and when they fell due was at risk of losing their home, he warned.
The judge said that banks could and should work with individuals when arrears were at a low level over a short period of time and there was an adequate explanation, such as loss of employment.
But he cautioned that there would always come a time, when banks would exercise their contractual right to foreclose if arrears persisted, as in this case, and he said home owners should not expect banks to refinance if they had been inconsistent payers.