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Double-digit defaults on NHT mortgages

The National Housing Trust, NHT, says the number of homeowners in default on their mortgages is on the decline, even while reporting that the delinquencies are in the region of 14 per cent of its portfolio.

Up to last week, the housing agency’s website indicated that it had listed 41 properties for sale by private treaty, representing properties confiscated for unpaid loans. Overall, it has more than 9,000 borrowers now in default.

NHT’s loan portfolio was valued at $257 billion at fiscal year ending March 2022, up from $238.5 billion the year before.

Loans accounted for 78 per cent of total assets of $328.32 billion as at March 2022.

No financial report was publicly available for FY2023.

Private treaty sales are one of the means used by mortgage lenders to recover loans in default. Such loans are usually secured by property assets of the borrower, including residential homes.

Private treaty is the option utilised after a public auction fails to secure a buyer.

The housing agency does not engage in foreclosures, a process under which a bank or other lender transfers the title from a debtor to themselves in a takeover of property, usually after the client has defaulted on loan payments.

As at September 30, NHT said its portfolio had 9,559 property mortgage loans in default but that the outturn was an improvement on the 9,905 bad loans on its books in the corresponding period of September 2022.

In total, 13.86 per cent of the mortgaged properties are in default. But: “This is 0.52 per cent less than the 14.37 per cent for the corresponding period in September 2022,” the agency told the Financial Gleaner.

Year to date, January to September, NHT put up 61 properties for auction, representing 0.01 per cent of the total number of mortgaged properties, the trust stated.

“The main reasons cited by our borrowers [for loan defaults] are financial challenges associated with over-indebtedness, reduced income, unemployment and chronic illness; family issues primarily due to marital breakdown; and non-prioritisation of their NHT mortgage obligations,” it said.

On the private side of the mortgage market, lenders have also been confiscating properties over unpaid loans, generating a steady stream of business for auction sites.

A.S. James and Associates Limited, for example, recently ran two newspaper pages of properties available for online auction in the third week of October. CEO Andrew James says his site receives a steady supply of such properties but from local banks.

“More people are becoming aware and asking to be included on our mailing list,” he told the Financial Gleaner.

The auctioneer said that properties for auction are now increasing in the wake of the roll-off of post-COVID moratoriums on bank loan repayments.

The online auction is preceded by a physical auction but properties are sometimes withdrawn from the auction block in cases where borrowers make arrangements to pay off their loans or a buyer is found prior to the online auction date.

“People are clearing their arrears,” James said.

No responses were forthcoming from banks and other mortgage lenders on the numbers of foreclosures.

“We get 15 properties from the banks every two months, but by the day of auction only 20 per cent are usually left, as owners clear their debts,” James said on Tuesday.

He added that the auction site, launched in 2020 to sell bank-owned properties, has seen activity from all over the globe.

The NHT, meanwhile, indicates that it remains bullish on the low-income market segment and isn’t looking to refocus on mid-income housing development, despite the proliferation of new units priced above $20 million.

Its loans to low-income contributors are priced at zero per cent.

The Guaranteed Purchase Programme and Developers Programme aim to deliver units at a price point of approximately $11.5 million for a two-bedroom home and $8 million for a one-bedroom unit.

In the medium term, the NHT has plans to develop about 43,000 housing starts.

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