General — 16 January 2012 — by Adele O. Trapp - [email protected]
House approves write-off of 781 mortgages worth $17 million
Prime Minister and Minister of Finance Dean Barrow on Friday, January 13, tabled a motion in the House of Representatives for the write-off of $17 million worth of mortgages which he said have an impaired value of $6.9 million. Government has purchased the mortgages from the Belize Social Security Board (SSB), and Barrow today confirmed the list at 781 beneficiaries, “who had originally borrowed $50,000 and below.”
  
Opposition Leader Francis Fonseca questioned: “Why has it become a matter for celebration and grandstanding and patting yourself on the shoulder when some 800 Belizean families have fallen into poverty [and] are no longer able to meet their mortgage payments?”
  
Barrow said that the call for help from homeowners increased after the Government “wrote off 9,000 almost 10,000 mortgages” held by the Ministry of Housing last year and some of the mortgage holders whose loans had been transferred to the SSB were saying if government had not sold their mortgages to the SSB, they would also have benefited.
  
Now that the Government has written off hundreds of loans formerly held by SSB, Barrow went on to declare that assistance is coming to mortgage holders of the Development Finance Corporation (DFC), who have also been “asking about the loans at DFC,” said Barrow.
  
On Friday, he announced: “There will soon also be a form of assistance [for] the DFC mortgages…” He said he doesn’t know whether it will be a complete write-off, a lowering of interest rates or a combination of both, but he could say assistance will come in one form or another.
  
National Trade Union Congress of Belize president, Dylan Reneau, told Amandala Thursday that, “A lot of trade unionists benefited from the initial write-off [for $60 million]. They are extremely happy!”
  
President of the Belize Chamber of Commerce and Industry Kay Menzies pointed out, however, that, “…one way or another, if the mortgage payer is not paying, then the taxpayer must… it is not just workers’ funds but taxpayer money going forward that will have to cover the cost of any effort like this.”
  
In explaining the history of the mortgages, Barrow said that most of the beneficiaries did not have original mortgages with SSB, but held loans with the Ministry of Housing, the BIMCO, Belize Building Society and St. James Building Society, and they were sold to the SSB, “when SSB was a little more than a feeding trough to Government” under the Opposition People’s United Party. The mortgages were then put in a pool for which advance cash was earned from overseas, through a securitization program.
  
The debts were principally held by the Royal Merchant Bank of Trinidad and Tobago (RBTT), and Barrow said most of the clients who had the housing mortgages “were not consulted or informed until even after the fact…”
  
He added that, “They also found their repayment schedule had been altered by the Social Security Board to their disadvantage.”
  
SSB CEO Merlene Bailey-Martinez told Amandala on Tuesday that SSB had been receiving about 40% of what was due to them from those who held those mortgages. The SSB had to find nearly $300,000 monthly from its pool of funds to meet its payment to the Government.
  
According to Barrow, GOB pocketed the proceeds of the sale of mortgages to SSB, but the SSB had to take a discounted payout.
  
Government prepaid some of that $70 million SSB had to service to the RBTT, which was to be repaid to Government by SSB in monthly installments. Those monthly installments now stand at roughly $469,000, with payments due until 2013 and even after this write-off, the SSB still owes the Government about $8 million and is left with about 100 mortgages from the pool, the CEO reported to us earlier this week.
  
Barrow furthermore explained in the House that the SSB has been repaying in lump sum at the end of the financial year and there is a line item in the budget for those, listed as repayment of securitization monies. For March 2012, said Barrow, the government had budgeted to collect $4 million from the SSB, but SSB had scheduled repayment of $11 million.
  
SSB will, therefore, not be collecting the $6.9 million but using it to pay for the mortgages as an offset transaction. Government, said Barrow, would still end up with budgeted collection of $4 million. Therefore, the transaction would not dent Government’s cash flow, he added.
  
Barrow said that the list of beneficiaries tabled in the House is as of the 30th of September 2011: no name has come off, no name has been added. As for “the great brouhaha about the goings on among staff of SSB,” who have been accused of insider trading for trying to benefit from the scheme by lowering their mortgages to fit within the $50,000 ceiling, Barrow indicated that none of them are getting their loans written off in the government pool, and members of the National Assembly can look at the original September 30 list and see it is exactly the list being introduced now for the House to approve.
  
Fonseca commented on the alleged insider trading scheme on Friday, saying, “…purportedly the CEO of Social Security Mrs. Martinez has paid $20,000 to the Social Security Board for a mortgage with a loan balance of about $69,000. Furthermore, several select members of staff of SSB were advised on what was necessary in order for them to qualify for a write-off and were allegedly given recommendations by the CEO of SSB to obtain loans at commercial banks and other lending institutions in Belize to borrow to pay down these mortgages to take their balances below $50,000.”
  
Former Prime Minister Said Musa pointed out that many of the mortgages the ruling United Democratic Party has been writing off were issued under his administration, which ended in 2008. He said that the UDP is taking advantage of things by dishing out “piñata goodies,” in the form of the mortgage write-offs and millions spent over the X-mas “ham and turkey” giveaways. Musa called it “a piñata campaign,” saying that “…the Housing Department and the representatives of the UDP and the Social Security Fund now have become one big piñata to dish it out.”

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