CDA cites low income families’ inability to pay housing loans

The ability of customers to pay their loans is one of the most important factors considered by lending companies, both private and government-controlled, before credit applications are approved, according to Commonwealth Development Authority Board Chair John S. Tenorio.

Mr. Tenorio admitted the existing housing loan program may have failed to accommodate more applications from indigent or low income Northern Marianas families but stressed that all loan-seekers have to satisfy similar criteria to qualify for a package.

He said the Commonwealth’s housing program does not give preferential treatment to a particular sector in the community but is guided by a set of criteria that have to be seriously looked at before any loan application is approved.

“The program being carried out by the Northern Marianas Housing Corporation caters to both low and high income families, although I must admit that majority of the applications that were approved belonged to those with better financial background,” Mr. Tenorio pointed out.

He explained NMHC, which is under the development authority, borrows money from the Marianas Public Land Trust to finance the existing home loan program and is obliged to make sure funds that are being loaned out will be returned.

“We borrow funds from MPLT so we have to make sure that the people whose loan applications we approve will be able to pay us in order to accommodate more customers,” he told reporters.

He is reacting to a statement by Rep. Heinz Hofschneider who claimed that the current housing loan program funded by money from the MPLT has failed to assist indigent families of Northern Marianas descent.

Mr. Hofschneider was asking the Legislature to thoroughly review a pending bill that will provide additional $3.8 million to the NMHC to continue the program. The funding will come from the $10 million loan package extended by MPLT in 1995.

Mr. Tenorio said most of those with low income background fail to qualify under existing housing loan program since credit investigations and evaluations show that they do not have sufficient financial stability to repay the loaned money.

“We try to accommodate everybody but they don’t qualify because they generate too low income which apparently cripples their future abilities to repay the loan. We can’t risk the MPLT money that we borrow for the program,” he emphasized.

Voucher Program

However, Mr. Tenorio said an existing federally-funded program has been implemented to primarily cater to families of lower income bracket that are not able to afford owning a home.

He said the voucher program earmarks housing funds for indigent local families who are sheltered in an apartment or for-rent houses of their choice on a specific amount.

CDA Executive Director Marylou S. Ada said the lending agency has been helping apartment owners cope with the hard economic times by referring to them U.S. citizens signed under the federal government’s Certificate and Voucher Program.

Ms. Ada said CDA has been giving recipients of housing benefits under the Housing and Urban Development, or Section-8 tenants, the chance to choose which apartment they would want to live in.

At present, there are 106 recipients of the housing benefits guaranteed by the HUD in the Northern Marianas who live in various apartment complexes around the island.

Under the program, the Northern Marianas Housing Corporation interviews low-income families and inform them how much money they can get for housing assistance from the federal government.

Since apartment rental fees are cheaper nowadays, Ms. Ada said most of the beneficiaries of the HUD housing assistance program have chosen to live in apartments.

“That way, we are actually helping apartment owners fill up vacancies through Section-8 tenants. It has allowed a lot of vacant places to be rented by voucher recipients,” she said in an interview.