Mortgage delinquencies climb - NHT portfolio passes billion dollar mark
Published:Sunday | September 19, 2010 | 12:00 AM
Avia Collinder, Staff Reporter
While businesses and consumers alike would like to see indicators of a recession in flight, conditions on the local property market do not support this.
President of the Realtors Association of Jamaica and CEO of La Maison Property Services Ltd, Edwin Wint, has confirmed that the number of distressed properties on the market is increasing. He indicated as well that those which are increasingly going to auction continue to bear reserve prices at market value, a factor which inhibits sales.
The National Housing Trust (NHT) said on Friday that it had resold 108 such properties by way of private treaty, and 46 by public auction since January 2009 to date.
Up to October 2009, 36 had been sold by public auction and 34 by private treaty, indicating that the majority of the sales by private treaty have occurred since then.
The trust also said that delinquencies to July 2010 had passed the billion-dollar mark in value, a one per cent increase over delinquencies at the same date in 2009.
In a response to Sunday Business on the issue, the trust said on Friday that the NHT's average delinquency rate (90 days and over) for the period January 2009 to July 2009 was 14 per cent. For the same period in 2010, the average rate was 15 per cent, reflecting a one per cent increase.
As at July 31, 2010, there were 14,858 accounts with arrears (90 days and over) valued at $1 billion. For the corresponding period last year, there were 11,964 accounts with arrears (90 days and over) valued at $805.5 million, the trust noted. At the top of December 2009, the value of the arrears was $879 million.
With dozens of properties farmed out for auction, the trust remains committed to selling such properties at market value, preventing buyers from picking forced-sale deals at this point.
"It is an industry practice that for houses being sold at auction, the market price is the reserved price," the trust said on Friday.
Payment plan
Options being offered to delinquents include a payment plan to liquidate arrears; restructuring of mortgage loans for a specified period; extension of the loan term; temporary reduction in mortgage payments, which may allow interest-only payments for an agreed period; and a moratorium, or suspension of mortgage payment for three to 24 months. Insurance fees must still be paid during the moratorium period.
Requests by Sunday Business to local building societies for information on properties which have been sent to auction were not answered.
According to Wint, better results on distressed property sales are being gained from private treaty sales where, sometimes, over time, the properties are sold for forced-sale value.