The Borrowers' Protection Bill would restrict the amount of salary deductions for loan repayments a company can authorize for an individual. According to Chairman of the Clearing Banks Association Nathaniel Beneby Jr., the country's mortgage "crisis" is aided by the fact that many people who default on their home loans are placed in financially precarious situations because they have taken on undisclosed loans for cars and furniture, which are deducted from their salaries.

"This question of salary deduction is a major issue," said Beneby at a press conference yesterday. The CBA head said many of these lenders are unregulated by the Central Bank and therefore do not follow the practices in commercial banking which prohibit approving new loans to people who have too much debt. "There are some lending institutions that are not regulated by the Central Bank. For example, furniture stores and car dealers, etc.," he said. "These persons who are not regulated by [the] Central Bank and who do not report to [the] Central Bank, they have the ability to obtain salary deduction, and so once they are able to receive their monthly payment through salary deduction from a consumer they will lend you the money.

"What the banks are seeing is when we are discussing the reasons for delinquent mortgages, at that time we learn there are lots of other consumer debts outstanding that either weren't disclosed in the first instance or persons raised these loans subsequent to the mortgage being granted." The government intends to enact legislation that aims to protect homeowners by regulating all lenders and limiting salary deductions.

"It's [the Borrower's Protection Bill] going to say that a company can only approve a maximum of a certain percentage of your salary to be deducted to go towards paying loan payments," Beneby said. "It's heartbreaking sometimes when we look at borrowers and see they have very little to carry home to their family." The Borrowers' Protection Bill is expected to be brought to Parliament once the House of Assembly resumes from its summer break. Beneby noted that the government also plans to introduce a Credit Report Bill in Parliament meant to supervise the credit reporting industry and licensing of credit bureaus by the Central Bank.

Click here to read more at The Nassau Guardian