‘No loan discrimination vs nonresidents’

While some banks have stopped granting loans to nonresident workers based on “irregular” employment status in the CNMI, Bank of Hawaii said it continues to treat contract workers the same way it does all other loan applicants.

Honolulu-based BoH executive vice president Ronald H. Leach said the bank follows the same criteria for all applicants when it comes to credit or loan applications.

He said that, although the bank made some changes in its credit program in view of overall economic condition in the Commonwealth, it makes no distinction against a certain group of people.

“We take a very conservative approach but our view and reasons of denying or accepting an application is based on the same guidelines: credit score, the client’s ability to pay, length of time of credit score, these things,” said Leach in an interview during a recent gathering on Saipan.

When asked specifically on nonresident workers’ history as borrowers, he said, “We’ve found very good people,” adding that many of them are highly qualified.

“Some of them [nonresident workers] have been here for a long, long time,” he said.

He said there is more stability and confidence when a client has a five-year or more credit history.

“The higher the score, the lower the risk,” he said.

Some local banks no longer accept loan applications submitted solely by nonresident workers regardless if their salary level meets the bank requirement.

For instance, one bank has begun denying nonresident workers’ loan applications due to “irregular employment.”

The bank said it perceives the yearly contract renewal of nonresident workers as not stable and therefore too risky to take unless they get a co-applicant who is a U.S. citizen or an immediate relative of a U.S. citizen.

Even when this is done, the bank would only grant a loan amount that is payable within the remaining months of the nonresident workers’ one-year contract.

Nonresidents, totaling some 40,000, consists the bulk of the local population.

Meantime, Leach has said that over the years CNMI clients have generally proved to be good payers as reflected in the territory’s low delinquency rate.

He said that, based on the Dec. 31, 2005 BoH report, CNMI has a less than 1 percent delinquency rate.