It's the bust after the housing boom of the first PUP term; hundreds of DFC loans called in for non payment; the insolvent DFC crushed beneath its own weight, no longer able to support its massive non-performing portfolio. So every week in the papers, long lists of foreclosures are advertised, many of them the property of Belizeans who became first time homeowners under the PUP's housing programme and are now unable to service their mortgages.
And while it's a domestic disaster for those folks, it's been a steady political hemorrhage for the Musa administration and now in the year of election, Cabinet has decided to stop the blood letting by reducing the monthly payments. Government will pay $100 a month to the DFC on behalf of 1,624 persons with loans of less than $35,000.
So, assuming that your loan principal was less than $35,000, and if, for example, your monthly payment to the DFC was $250 dollars, it will now be $150.
Pretty much the same thing will be done at Social Security which holds quite a large number of non performing or housing mortgages. The details of that plan have not been hammered out yet though.
That's an interesting case because the SSB housing portfolio is between $40 million and $50 million, and more than half of those mortgages, about $29 million worth are referred to as imperfect. That means they lack proper documentation, where houses were built on properties for which the owner has no title. Because the title situation is unresolved, those houses cannot be foreclosed upon any way and so in any case, they would have to be subsidized.
Of course, those mortgages, defective as they were, were still tossed into the mortgage bundles during the heady but heedless days of the Ralph Fonseca paper driven securitization frenzy.
And one more thing. As for the other part of the DFC foreclosures, the embarrassment of public notices of default and having one's business in the street, well that's stopping too. The publication for sale of all low-income houses and outstanding loans will stop immediately.
While the intervention approach may not be good governance practice in line with the expectations of multilateral institutions, it's good politics, minimal actual cost, and put into perspective of larger DFC giveaways to favored friends of the government - it's a drop in the bucket.
