|Sands calls Mortgage Relief Plan ‘bait and switch’|
Guardian Business Editor
Published: Aug 17, 2012
The former chairman of the Bahamas Mortgage Corporation (BMC) is calling the Mortgage Relief Plan a classic case of "bait and switch".
Dr. Duane Sands, who is also the deputy chairman of the Free National Movement (FNM), said the initiative unveiled by the government on Wednesday is "purely a token plan" that will not begin to solve the country's debt woes. He pointed out that $10 million in aid will not come even close to solving the delinquencies in BMC's portfolio, let alone those in commercial banks.
"Not only has it been pared down, but I think it is purely a token plan intended to basically say they are delivering on what they promised," he told Guardian Business. "But quite frankly, the population where it was directed are not going to benefit from this plan."
According to a recent communication by State Minister of Finance Michael Halkitis, the government estimates 1,100 Bahamians will qualify for the plan's specific criteria. A maximum expenditure of $7,500 has been earmarked for each applicant to assist in the outstanding loan.
A portion of the mortgage, to be determined by the banks, would be waived and become interest free for a period of three years. The system should be in place by the first week of September and last for six months.
Winston Rolle, the CEO of the Bahamas Chamber of Commerce and Employers Confederation (BCCEC), called the new program more "realistic".
After the Mortgage Relief Plan was first introduced, the system was attacked by rating agency Moody's, claiming the relevant aid for the entire country would translate into an expenditure of at least $250 million.
"It would have been way too much to expect the banking community to just go ahead and forego mortgages to that extent," Rolle told Guardian Business. "Then you are interfering with business, which would not make sense."
That said, the chairman of the BCCEC noted there will likely be a measure of "disappointment" for the plan.
"They (the electorate) thought it would be a relief plan to them," he said.
The FNM deputy chairman agreed the revised Mortgage Relief Plan is indeed far more sensible. The plan is in keeping with how the former government wished to approach the mortgage crisis, he said, by identifying those who want to pay, can pay, but have been hamstrung by circumstances arising from the financial crisis.
"It shows precious little creativity," he claimed.
Sands told Guardian Business the best approach is to truly disclose the magnitude the of the problem, rather than provide solutions that only mask the issue.
"We are going to have to admit that some things aren't pleasant. And that many of the people who find themselves in trouble are there because of their own personal decisions, and not because of the downturn in the economy," he said. "Some of these individuals are in trouble because they were aided and abetted into getting into trouble by lenders and politicians."
The current plan "cherry picks" a selection of the population, but leaves the majority out in the cold, he explained.
"The most significant thing is the overwhelming majority of people to whom the promise was made will have no benefit to this plan. That is the disingenuous part. It was the premise on which they were elected," Sands added.