CDA loan collections up 3.8 percent

With two more months left in the fiscal year, the Commonwealth Development Authority already recorded a nearly 4 percent jump in its collections to $1.72 million.

The figure was as of June 30 this year and showed a huge increase from fiscal year 2010 collections of $1.24 million, according to CDA loan manager Oscar C. Camacho, who is confident that overall FY 2011 collection figure will go higher at the end of fiscal year in September.

The agency’s loan manager projects that the projected overall collection for the current fiscal year will also reflect almost the same collection figure in FY 2009 which was $2.06 million.

Camacho told Saipan Tribune that the success of the agency’s collection was due to the fact that more loans have been recouped and are being recoup through the continuous implementation of CDA’s debt relief program.

CDA’s Debt Relief Program assists default or delinquent borrowers to make the necessary payments by restructuring their loans up to 30 years with a lower interest rate of 2 percent. This program was initiated in 2006 to help troubled borrowers meet their payments to the agency and has been considered a big success.

CDA records show that its collections in the last seven fiscal years indicated an upward trend with $1.17 million in 2004; $1.07 million in 2005; $98,000 in 2006; $2.62 million in 2007; $1.44 million in 2008; $2.06 million in 2009; and the aforementioned $1.24 million in 2010,.

Camacho said the increase in 2007’s collection was result of the first year implementation of the debt relief program and the agency’s aggressive collection efforts.

Meantime, the loan manager attributed the “softening” of the collections in fiscal years 2008 and 2009 to the threat of “debt forgiveness” attempts in the Legislature. Legislation that proposed write-off and forgiveness of debts to CDA were junked by both the House and Senate.

Saipan Tribune learned that for FY 2011, there are a total of 42 accounts under the debt relief program and more are expected to be transferred starting this year.

Camacho disclosed that besides the existing 42 borrowers, additional 40 accounts are being worked out to be included on the program.

These additional delinquent borrowers are under the Development Corporation Division which used the agency’s revenues as loan portfolio. The DCD program offers 4.5 percent interest rate for fishing and farming loans and 7 percent interest rate for commercial and other types of loans.

Camacho said the additional 40 accounts to be transferred were identified as “old borrowers” from DCD program and whose businesses are still active on island but have been suffering from economic hard times. DCD has an existing 68 borrowers.

Camacho said CDA targets to transfer at least 15 accounts every year to the debt relief program and targets to complete the transfer of all 40 additional accounts in 2013.