Housing program failed to help poor • Home loan program benefited middle- or high-income families

The current housing loan program funded by money from the Marianas Public Land Trust has failed to assist indigent or low income families of Northern Marianas descent due to high interest rates, according to Rep. Heinz S. Hofschneider who is now seeking to turn around the system.

He has asked for thorough review by the House of Representatives on a bill that will provide additional $3.8 million to the Northern Marianas Housing Corporation to continue the program.

The funding will come from the $10 million loan package extended by MPLT in 1995, but the Legislature needs to pass the measure to allow NMHC to repay the debt through the annual revenues the land trust divest into the Commonwealth treasury.

So far, about $6.137 million have been used by the housing corporation to grant approximately 120 mortgage loans to local families, according to MPLT Chair Juan S. Torres.

But Mr. Hofschneider maintained majority of the borrowers have been middle or high-income families who were able to qualify for the loans because they could pay the interest rate of between six to nine percent every year.

“The remaining portion of $3.8 million should be reserved for program that would attempt to provide a means of allowing the low-income families to have a house of their own,” he told in an interview yesterday.

Noting that many of them are beneficiaries of federally-funded voucher program that pays their monthly rent, the lawmaker believed the present local housing loan program should be re-directed to address their needs.

He said lowering the interest rate imposed by MPLT to NMHC from six to three percent and stretching out repayment for up to 30 years would be means of providing easier access for low-income families to take out these housing loans.

“I am not advocating that we have a direct handout to these families. That will be in direct violation of MPLT’s fiduciary responsibility,” said Mr. Hofschneider.

Constitutional amendment

If the land trust is cautious in making these steps for fear that it would not be in accordance with its constitutional duties, he said he would propose an amendment to the Constitution to permit them.

“But I don’t believe that issuing out a three percent interest rate is going to be in violation of the fiduciary duties. It is based on financial responsibility, what about the social responsibility,” he asked.

Since MPLT remits between $1.2 million to $1.4 million every year into the general fund, Mr. Hofschneider said this funding could be used to subsidize a lower interest rate in order to assist low income families.

“If we can take one family off the entitlement program of the federal voucher and provide them the means to have a house of their own rather than renting, we have benefited and uplifted their livelihood,” he explained. “That is the stipulation on public land income.”

The House earlier has deferred passage of HB 12-171 offered by Rep. Antonio M. Camacho to look into Mr. Hofschneider’s proposal.

Drawn up jointly with MPLT, the measure seeks to authorize payment of NMHC’s $10 million loan to MPLT using the land trust’s annual remittance and to grant a 10-year moratorium on debt service by the housing corporation to the government.

The move was prompted by appeal from housing officials who said the agency’s loan portfolio cannot be sold to commercial banks due to the debtor’s inability to qualify for financing.

The housing corporation has also noted that many have asked for their help in terms of financing for house construction on parcel of lands provided by the Division of Public Lands which has threatened to revoke the homestead permits for non-compliance.

“NMHC does not have the current financing to grant new loans to the significant number of applicants who wish to avail themselves of the program and MPLT cannot receive timely repayment of their loans,” said Mr. Torres.