Six houses foreclosed for failure to pay home loans

The Northern Marianas Housing Corporation has recorded a modest growth in the number of delinquent home financing borrowers despite the disturbing increase in the rate of non-performing loans in the corporate division of the Commonwealth Development Authority.

Total number of derelict home mortgage borrowers have grown by a trivial two percent by end of the first quarter of the year since the onset of the Asian currency crisis, which made life in the islands economically harder due to the recession’s impact on CNMI’s largest revenue-generating industry.

CDA Board Chair John S. Tenorio said programs recently installed by the housing corporation have been instrumental in the very low percentage of non-performing home loans, compared with the 15 percent delinquency rate in corporate and commercial debts.

NMHC has been carrying out a series of community outreach programs including regular discussions with homeowners to help them strengthen their capabilities of paying their outstanding loans, thus, preventing foreclosure.

The housing corporation holds dialogues with new and existing homeowners every quarter where issues relating to problems faced by the borrowers, such as difficulty in servicing outstanding loans, are being discussed.

“We teach them how to become responsible homeowners by paying their mortgage on time. We also teach new homeowners not to purchase other things that will put pressure on their budget which may complicate their ability to pay home loans,” said NMHC Executive Director Marylou S. Ada.

According to Mr. Tenorio, only six residential properties have been foreclosed out of the nearly 1,000 home loan agreements approved by the housing corporation in a four-year period.

Also during this period, only two percent of all home financing borrowers have failed to meet monthly payment deadlines.

However, CDA and NMHC continue to experience difficulties in bringing its home financing program to a higher level despite the low delinquency rate in home mortgage primarily due to the exclusive right to own a land granted by the CNMI Constitution to people of Chamorro and Carolinian origin.

Article 12 in the Commonwealth Constitution which restricts land ownership in the islands to local residents hamper the housing corporation’s efforts to move home mortgage financing to a much better scale, Ms Ada said.

Because of this restriction, chances have become slim for both private and government financial institutions to sell the foreclosed property in the open market since potential buyers are limited only to those who are of Northern Marianas descent.

Ms. Ada stressed that from among the culturally-qualified buyers, the market will be trimmed further to those who actually have the financial capability to buy the foreclosed property.

Mr. Tenorio noted that banking institutions have taken conservative attitude toward giving out advances due to Article 12 restrictions which has forced CDA to lower by 40 percent the number of home loan agreements it projected to close by end-December 1999.

The housing corporation managed to close only 600 home loan agreements by end of last year, short by 40 percent from the original target of 1,000 housing loan packages.

Over 500 applications for home financing are currently pending for review and credit investigation by the housing corporation and other private financial institutions.

Still, NMHC hopes to exceed the targeted number of approved home loan agreements before year-end, after failing to meet its goal of closing 1,000 mortgage applications before the Year 2000.

NMHC has processed and approved loan applications for the expansion of 45 houses and the construction of at least 51 new housing units at the Sugar King II.

The housing corporation was forced by economic slowdown and banking institutions’ conservative attitude toward giving out advances due to Article 12 restrictions to lower by 40 percent the number of home loan agreements it projected to close by end-December 1999.