AmbergrisCaye.com Home Forums About Belize Nation $17 Million Housing Loans write off; who pays?

The Prime Minister's New Year's message offered a gift to persons who owe thousands of dollars to the Belize Social Security Board (S.S.B.). The government says it will purchase from S.S.B., all mortgages at or below fifty thousand dollars. The mortgages were originally with the Ministry of Housing before they were transferred to the S.S.B. The announcement of the New Year's goodies, has unleashed a firestorm from persons who believe that taxpayers will pay for electioneering. News Five today spoke to Minister Michael Finnegan who says that after the purchase is complete, the government will write off seventeen million dollars in mortgages.

Michael Finnegan, Minister of Housing

"It's a government that is living up to its promise to help those at the bottom of the economic ladder in the country-meaning the poor, the marginalized, the underprivileged, etcetera. It is a government program to lift them from the bottom up."

Jose Sanchez

"These loans were originally housing loans or they were transferred?"

Michael Finnegan

"Most of these loans were originally housing loans, but during last term of government when they were dealing with this securitization program with the Royal Merchant Bank of Trinidad, they passed off these people's mortgages without telling them anything and sold them to the Social Security Board so as to give the impression to the Royal Merchant Bank in Trinidad and Tobago that the government had mortgages that were operating and to fool them in Trinidad."

Jose Sanchez

"How much millions are we talking about that people won't have to pay?"

Michael Finnegan

"The loan values some seventeen odd million dollars, but government will not pay that for it because Social Security owes government some money and I think government will get these mortgages that are valued at some seventeen million dollars for some six million dollars."

Jose Sanchez

"So it is not something that; cause I know some people are assuming that the taxpayers are probably going to have to foot the bill?"

Michael Finnegan

"No, no, no, no, no, no, no, no, no tall at all. Social Security owes government some money; these are some seventeen point nine million dollars worth of loans and because of the swap off that government will do with Social Security, government will be paying some six million dollars for these mortgages. So it is not government going out there and will have to find six million dollars or extra money out there. That is not the case at all, at all."

Jose Sanchez

"The only requirement then is that the loans are below a certain amount?"

Michael Finnegan

"All these loans-almost seven hundred and eighty loans-but they are all within the range of fifty and below. But if you break them down, if you break them down, most of the loans are between sixteen thousand, seventeen thousand, twenty-odd thousand, thirty-odd thousand, etcetera."

Jose Sanchez

"Okay, last question: is this a preview to an early election?"

Michael Finnegan

"This has nothing to do with early elections. I don't know when the elections are going to be called; that is the prerogative of the Prime Minister so I don't know that. But this has got to do with the philosophy of a government; that a government that is bent hell on bringing the small people from the bottom of the economic ladder to another level on the ladder."

There are a total of seven hundred and eighty persons that will benefit from the write-off.

Channel 5

PRIME MINISTER EXPLAINS SOCIAL SECURITY MORTGAGE WRITE OFF

Prime Minister Dean Barrow today gave a detailed explanation of the multi-million dollar mortgage write off for poor and middle class citizens. In his New Year's address to the nation, Mr. Barrow announced that his government will be taking over seven hundred and eighty over non-performing mortgages from the Belize Social Security Board. The intention, according to the Prime Minister is to then write those mortgages; which means relieving the holders of their obligations and putting more money in the hands of those who need it most.

Prime Minister Dean Barrow
"It seems to me that $50,000 was a good point at which to concentrate because actually I keep talking about pro poor programs but I try to make the point that we cannot forget the middle class, it's the poor and the middle class. The people whose loans are in excess of $50,000 well you might argue if you are at 60 but once you start jumping 70, 80, 90, 100,000 I don't know that you can any longer be considered poor, maybe you are upper middle class. Any way there is room for a difference of opinion as to whether at 50,000 I am reaching the optimum audience in terms of social relief but that was the philosophy behind it."

Prime Minister Barrow went on to explain that while the write off will amount to seventeen million dollars, it is not the amount that his government will be paying to the Belize Social Security Board to purchase the loans destined for write off.

Prime Minister Dean Barrow
"There is a 60% impairment rate so that the value of the portfolio, while the mortgages nominally value 17 million dollars; I am not going to buy them for 17 million dollars when 60% of them are non performing. I made a proposal to SSB, their investment committee looked at it, their board of directors looked at it they came back to say to me, we from the point of view of our investment department, the professionals value the 17 million dollar portfolio at a going rate of 6.9 million dollars so that is what Government will be paying for 17 million dollars worth of mortgages, 6.9 million dollars being the discounted value taking into consideration the fact that there is a 60% non performing element with respect to the loans."

Mr. Barrow says that he will be going to parliament in the coming weeks to get permission for government to effect the mortgage write offs, which will have the effect of not only bringing debt relief to hundreds of people; but will also generate economic activity. Prime Minister Barrow says that the six million dollars discounted prices tag for the bad mortgages does not mean that his government will be dipping into the national treasury to pay for the non-performing mortgages. The Prime Minister says that the mortgage forgiveness is not a selective process but that it is an exercise that will benefit everyone who meets the criteria. Prime Minister Barrow says that the decision to write off the non-performing mortgages was done after consultation with Cabinet and is in line with his government's pro-poor initiatives.

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