CDA fails to meet 1,000 home loan deals • Chair Tenorio blames Art. 12 restrictions, economic slowdown

Slowdown in economic activities and banking institution’s conservative attitude toward giving out advances due to Article 12 restrictions forced the Commonwealth Development Authority to lower by 40 percent the number of home loan agreements it projected to close by end-December 1999.

CDA Board Chair John S. Tenorio said the Northern Marianas Housing Corporation managed to close only 600 home loan agreements by end of last year, short from the original target of 1,000 housing loan packages.

“We were targeting to close 1,000 home loan agreements by year 2000 but due to financial difficulties and external market forces, we fell short by 400 from our target,” Mr. Tenorio said.

The CDA chief also mentioned the restrictions imposed by Article 12 which limits to the indigenous people the right to own land in the Northern Marianas.

This brings banks at a higher risk since it could not forfeit land or real estate properties entered into as collateral in case the borrower defaults in payment, he said.

In turn, some banks and other financial institutions are trying to reject home and commercial loan applications backed by land and real estate properties as collateral, Mr. Tenorio said.

At the same time, he explained most home loan applicants fail to satisfy the minimum salary requirements set by financial institutions due to widespread reduction in work hours which reflected in the employees’ paychecks.

“The downturn in economy forced the government and private companies to cut down on manpower hours which eventually reduced the take-home pay of a big number of workers disqualifying them from obtaining loans,” he pointed out.

Mr. Tenorio disclosed that NMHC has approved roughly about 600 housing loans within the last two and a half years and intends to close more home loan agreements this year.

Interest rates have dropped from 10 percent to 11 percent two years ago to between eight percent and nine percent now.

Mr. Tenorio said CDA is now processing 300 housing loan applications with almost half of it expected to be closed in the next couple of months while NMHC targets to approve the rest by this year.

CDA has been receiving an average of 20-40 housing loans every month, making CDA a major instrument in ongoing housing projects which include the construction of almost three hundred residential units