NMHC asks banks to offer mortgage loans

In fresh attempts to improve access of CNMI residents to home ownership, the Northern Marianas Housing Corporation is trying to encourage the participation of two private banks in the institution’s mortgage lending program.

Executive Director Marylou S. Ada said the housing corporation has been in discussion with First Hawaiian Bank and the Union Bank of California for a possible Memorandum of Agreement that will tie them to NMHC’s mortgage lending program.

The government-owned housing firm has joined hands with BankPacific, Bank of Guam and Bank of Hawaii in making mortgage financing available to local residents who have expressed interest in owning a housing unit.

The three commercial banks have, since the signing of their respective MOA with NMHC, started offering home loan services. This came following a constitutional guarantee that they can foreclose and dispose of a property within a period of 10 years, in case the borrower defaults in payment.

Amendment 34 of the CNMI Constitution allows private lenders to hold and dispose of the property for 10 years from the date of foreclosure.

With this amendment, private banks can foreclose and sell the property and get their money back as long as they do it within 10 years from they day the property was foreclosed.

The Commonwealth Development Authority earlier disclosed that some of the banking institutions in the Northern Marianas have already pledged to upgrade their portfolio earmarked for long-term housing loans but only up to a limited amount.

Private financial companies normally look at loan agreements stretching up to between 20 and 25 years as too risky, especially on the residential side due to prevailing impression that there is not enough market for housing units in the CNMI.

Commercial banks normally practice self-restriction on the infusion of more capital to residential credit packages because these are normally long-term that stretch from 20-25 years.

CDA managed to entice a good number of private financial institutions to go into long-term housing loans since the market trend has tremendously improved.

The usual terms given by banks on long-term loans is 12 years but added that nobody can afford a payment of at least $2,000 a month under this prevailing agreement. (Aldwin R. Fajardo)