The Progressive Liberal Party's (PLP) proposed mortgage relief plan is a 'realistic, comprehensive' approach to solving the 'crisis' in the housing market, Chairman of Arawak Homes Franklyn Wilson said yesterday.
Wilson said it is time to implement a strategy that would be beneficial to homeowners and banks.
The PLP proposes obtaining agreement from local banks to write off 100 percent of unpaid interest and fees for people facing foreclosure.
The party has also pledged to work with banks and other institutional lenders to agree to a 120-day moratorium on foreclosures.
The PLP has also pledged to "actively encourage" the banks and other institutional lenders to extend the loan repayment period under defaulting mortgages to the maximum allowed by the financial institution.
The PLP said that in return for the banks agreeing to those measures, the government, for its part, would guarantee the interest payments of the affected borrowers for five years through 2017.
Wilson told The Nassau Guardian that the large number of foreclosed homes on the market is stifling new home construction.
This slowdown in the construction market has a negative trickle down effect for businesses that benefit indirectly from the housing market, he added.
"The biggest competition for Arawak Homes today is foreclosed homes. Until this evaporates this will be a tremendous dampener on new home construction," said Wilson, who was consulted on the plan before it was made public.
"The magnitude of all these houses on the marketplace, given the size of our economy, is a tremendous dampener on the credit worthiness of the country as a whole."
He said suggestions that the proposal could threaten jobs in the banking sector is "fear-mongering" at best.
"The most significant aspect of this which banks would have to probably reflect on is that provision which says that banks will be restricted in what they must do before they can sell people's homes, particularly after people have invested some mutually agreed threshold," Wilson said.
"The truth of the matter is, that's already the law in England. So if the banks find that provision tolerable in England, why should that cause them to lay off people?"
Wilson added that the PLP wants to work with banks and other lending institutions in order to have more oversight over borrowers with too much debt.
"When people get their mortgages they can survive if that's all the credit they have," he said. "But after they get the mortgage, they go to the car company and the furniture company and they take on all this extra credit.
"That's what destabilizes a lot of these individuals. So the banks have a great interest in this idea of regulating these institutions, and that's a major part of this program and that's part of the reason why it's not reckless."
However, Bahamas Mortgage Corporation Chairman Dr. Duane Sands said the proposal is nothing more than "irresponsible rhetoric".
He told The Nassau Guardian that there is no quick fix to solving the problems in the housing market. He also criticized the PLP's pledge to guarantee interest payments of affected borrowers for five years, up to 2017.
The Democratic National Alliance (DNA) said the PLP's plan to ask commercial banks to write off 100 percent of unpaid interest and fees for people facing foreclosures will not go over well with bankers who are in the business of making money.
"[PLP Leader Perry] Christie's view is naive and he is not thinking clearly. He is thinking in the context of gaining support for the next general election," DNA Leader Branville McCartney said.
"Christie should really be focusing on getting Bahamians back to work and back to operating their businesses. This will help in Bahamians being able to pay their mortgages."
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