With the Progressive Liberal Party (PLP) securely in the country’s driver’s seat, Bahamians are looking forward to certain campaign promises being upheld. One of those big, complicated ones is the conversation on mortgage relief, which Fidelity Group Chief Executive Officer Gowon Bowe said should be congruent to the conversation on bankruptcy legislation.
According to Bowe, there needs to be empirical data drawn up on how successful past mortgage relief plans were and the decision on how to move forward to help Bahamians on the cusp of defaulting on their loan obligations.
He explained that these kinds of promises to constituents can often build angst against banks, which have a responsibility to many more people than simply those who hold mortgages.
From the onset of the COVID-19 pandemic banks sought to assist people whose income situations had changed, and Bowe explained that some people have made certain arrangements with their banks.
“Where you have an individual who is communicating with the bank and making payment arrangements, those arrangements will be accepted and accommodated, because it is more important for the bank to recover its funds than it is to see repossession and sale [of property],” said Bowe.
“When you look at the original mortgage relief plan, there was a limited amount of persons. There was some government subvention issued which were to the benefit of the mortgagors in those circumstances, but I think we have to step back and say, ‘What is the primary objective of the administration of the day?’
“If it is to protect persons against losing their homes, it also has to be juxtaposed against persons who are depositors and shareholders in banking institutions … if you force banks to take losses, that will impact other stakeholders.”
He added that administrations should not simply legislate their way to keeping such a campaign promise, but must work with banks to ensure antiquated legislation allows for homeowners to work through their debt without facing immediate repossession.
Bowe added that banks will not automatically shirk their responsibilities to employees and shareholders to satisfy a government’s mortgage relief agenda.
“If you’re asking me to breach my fiduciary responsibility to all parties and I am not going to breach that fiduciary responsibility, and certainly if legislation is brought about to force that, then shame on the administration that does that,” he said.
The PLP in its Blueprint for Change promises to “work with banks to keep Bahamians in their homes” and to collaborate with banking institutions to “find ways to save homes from being repossessed, and amend relevant legislation”.
The party also called for a plan to waive, or reduce interest payments on qualifying mortgages.
Bowe said there is a lot to be considered by governments in the move to assist homeowners, and much more for banks to iron out.
“You cannot look at one stakeholder group, being the borrower, without understanding the ripple effect.
“So, I think there is still much to be elucidated in that regard,” he said.