JMB, Churches partner on J$100m mortgage fund
Published:Sunday | March 6, 2011 | 12:00 AM
Jamaica Mortgage Bank (JMB) has partnered with Churches Cooperative Credit Union to provide mortgage loans to its members at a rate of 12.5 per cent per annum.
The agreement was inked recently by the two financial institutions and will see JMB making J$100 million available to Churches to provide mortgage loans for its members.
According to a release from Churches, the credit union will administer the mortgages, collect the monthly instalments, and ensure that the loans are repaid in a timely manner.
Janyce Robinson, Churches' general manager for credit administration and loan risk, said the partnership with JMB is part of the credit union's plans to expand its service portfolio in order to meet the needs of its growing membership base.
Competitive rate
"As a credit union, we are unable to procure matching funds to finance long-term mortgage loans from our normal operations, so some time ago, we approached the JMB, which is the best source of mortgage funding," she said.
"It is our strategic intention to be a major mortgage provider and eventually establish a mortgage company to compete with the major mortgage lenders because we do not only want to provide consumer-durable loans to our members; we also want to offer them mortgage facilities to purchase homes."
The agreement will see Churches offering mortgage loans to its members at the competitive rate of 12.5 per cent per annum, and managing the loan portfolio.
The credit union's members will be able to borrow up to J$15 million to purchase, construct, or improve on a home, and can supplement these funds with a loan from the National Housing Trust (NHT).
The credit union said members would also benefit from a 50 per cent reduction in commitment and processing fees and all mortgages will be covered by life insurance, which will protect members' beneficiaries.
JMB General Manager Patrick Thelwell said Churches was one of the first credit unions to sign a mortgage loan agreement with JMB.
"CCCU was chosen because it is representative of the type of financial intermediary that the JMB wants to do business with. They already have a mortgage portfolio, so they have the capacity to underwrite, and they are a viable institution in good financial health," he said.
Thelwell said the loan agreement would be of great benefit to Churches' members as they would now be able to get competitive mortgages from their credit union.
"It is also a fulfilment of JMB's mandate, which is to make mortgages available to as many people as possible. We are in the business of facilitating home ownership and a number of people will be able to benefit from this programme," he said.
Thelwell, in a previous interview with Sunday Business, had said the partnership would fall under its secondary mortgage market functions.
He said that the advent of the Jamaica Debt Exchange and a tax- free status on its bonds allowed the entity to access low-cost Jamaican-dollar funds that it could redirect into the mortgage market.
Thelwell said JMB would also be having a similar arrangement with GSB Cooperative Credit Union, which it would launch sometime in April.
"We are looking for institutions that have mortgage portfolios and the underwriting is good," said the JMB boss.
Thelwell said its efforts to reinvigorate its secondary-mortgage functions was to help satisfy effective demand for the housing sector.
The NHT, in a survey done five years ago, had estimated the effective demand - those ready to buy homes - at around 100,246.
"We are trying to increase effective demand by increasing affordability," Thelwell said.