Open Letter to the Prime Minister – The Simmering Mortgage Crisis

Submitted by Heather Cole

Dear Sir,

Re: Emergency Request – The Mortgage Crisis in Barbados

There is a very disturbing ad in today’s Sunday Sun of July 2nd, 2017. The Republic Bank has listed for Sale by tender no less than 17 properties in Barbados. It may perhaps be the tip of the iceberg as the meltdown of the mortgage crisis starts to manifest itself.

It is the dream of every Barbadian to own a piece of the rock and to build a home. It represents more to the average Barbadian than the right to vote. It means a fixed place of abode, forever removing the stigma associated with the chattel house which rested on land that they did not own and could be removed at the owner’s pleasure.

That dream seems to be swiftly vanishing. One would have thought that the novelty of social mobility from the chattel house to a permanent fixture would have come with some merits that would foster protection by government.

While government can squarely be blamed for digging the pit for the homeowners to fall into as it has not provided them with the necessary legislation for their assistance, the banks are also to blame. They appear to be a willing accomplice to government’s action, comparable to pulling the trigger of a loaded gun to ensure that the homeowners do not escape the fate of death and subsequently fall into the pit.

The commercial banks in Barbados are sitting on over $15 Billion dollars. They will not topple over and die. No bank has a need for a place to rest its head at night or food to eat. It is significant to note that it is the preference of the commercial banks to foreclose on Barbadians and then sell the debt at a % of what is owed. This has an effect on the landscape; there are many unoccupied houses that will become vandalised and overgrown with bush as the banks are unable to sell. For Barbadians it is not a sellers’ market or a buyers’ Market.

There is not enough money in circulation.

What should also have us all worried is that this debt will be bought by foreign entities taking the land away from the persons whose navel strings are buried on the island. The people who live in Syria and Saudi Arabia should not be owners of land in Barbados.

As the mortgage crisis is now in full swing, I thought it best to read up on CAP 236 to find out what relief was written into that section of the Laws of Barbados to offer relief to Barbadians.

I was left in shock. Not only does the law not offer any relief or protection to the mortgagor, it appears to have been written in favour of the lending company. After 50 years of independence and the creation of a vibrant middle class, one would have at least thought that by now the laws would be on the people’s side.

There are no identified rights for the mortgagor. The law offers no protection to the investment of the homeowner and that is wrong. All of the covenants are in dire need of revision. S113 states that it is the duty of the mortgagor to act in good faith and have regard for the mortgagee. There is however no reciprocal statement that the mortgagee should also act in like manner to the mortgagor.

If Barbados truly is a nation of Laws, the laws must reflect the social, political and economic well being of all of its people; not for one class and against another; not for the rich and against the poor; not for the companies and against the consumers; not for the banks and against their customers.

In essence this Act as it relates to mortgages is socially unjust. Perhaps it has never been challenged and the time is now ripe to challenge if they do not provide equitable solutions to the mortgage crisis that the island is now facing.

Presently, government can offer some relief based on the Act. It has the authority to change interest and set rates. However, one hopes that government understands that this is a crisis and a crisis that will not only affect middle class housing but will have an effect on every social and economic situation on the island. Whether rich or poor when families are stable, communities thrive. Societies with vibrant middle classes always thrive. Refusing to act now will put the entire Barbadian middle class at risk of survival and reopening an avenue to drive the country back into a time when only the very rich and the poor existed.

In my opinion, it is in the best interest of the people for government to:

  1. Have the courts enforce an emergency stay on those 17 properties that the Republic Bank has advertised for sale on July 7th, 2017.
  2. Have the courts enforce an emergency stay on any property that has already been offered or advertised for sale by any commercial bank or financial institution registered to conduct business in Barbados.
  3. Set a moratorium on the sale of properties mortgaged by the commercial banks or financial institutions registered to conduct business in Barbados until such time as a national solution to this crisis has been devised.

I am offering my assistance to help create an equitable solution to this crisis. I await your urgent response.

Sincerely,

Heather Cole

cc: The Leader of the Opposition
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61 Comments on “Open Letter to the Prime Minister – The Simmering Mortgage Crisis”

  1. Scared as hell July 2, 2017 at 10:45 PM #

    Dear Ms. Cole. I am still trying to find out, after 3 yrs, why my mortgage maturity date has “jumped” from 2014 to 2027. I am being threatened by bank’s lawyers about foreclosure. I retained the services of an attorney but despite his lettrrs to said bank’s attorney they continue to address correspondence to me.

    Like

  2. Heather July 2, 2017 at 11:01 PM #

    Scared as hell, which bank? and who is the bank’s attorney?

    Like

  3. Niles .. July 2, 2017 at 11:20 PM #

    Scotiabank Hastings Lawyers

    Sent from my Samsung Galaxy smartphone.

    Like

  4. Scared as hell July 2, 2017 at 11:22 PM #

    Scotiabank
    Hastings Lawyers

    Like

  5. Bajan Free Party/CUP/.Violet Beckles Plantation Deeds from 1926-2017 land tax bills and no Deeds,BLPand DLP Massive land Fruad and PONZI July 2, 2017 at 11:24 PM #

    Scared as hell July 2, 2017 at 10:45 PM #@ your lawyer is a crook and the lawyer for the Bank , better check my list and see if the lawyer is on that list, These lawyers only work for money and sometimes with the bank, Time getting hard for lawyer for no sale because of land fraud, Better do your own home work and make sure you have a clear title” take it back to the Plantation deed, the fraud records seem to stop in 1913 Barbados Library on line and at Sir COWs door and CLICO. If you dear list the Plantation that you are on i will see what my recrods say, If they did a fraud on you the house is to be free and the banks need to sue the lawyers, Most fraud loans in Barbados was done by the big name C&S Y&B , the year of the loan and the lawyers names, reach me @ Bajan Free Party on face book

    Like

  6. Bajan Free Party/CUP/.Violet Beckles Plantation Deeds from 1926-2017 land tax bills and no Deeds,BLPand DLP Massive land Fruad and PONZI July 2, 2017 at 11:29 PM #

    Scared as hell July 2, 2017 at 11:22 PM #

    https://www.facebook.com/Bajan-Free-Party-BFP-HonAlex-MitchellEl-1767331239973521/

    Like

  7. Heather July 2, 2017 at 11:44 PM #

    Scared as hell send me a message on Facebook.

    Like

  8. Hal Austin July 3, 2017 at 4:20 AM #

    Scared as Hell,
    I am aware that things happen in Barbados that should not happen in any civilised nation, but your mortgage is a contract, the banks just cannot change the maturation date. If they have done this in writing with you without any consultation, take them to court. The only problem is that in Barbados cases can take up to 20 years to be heard.
    On a wider note, as I have said before, the foreign-owned banks in Barbados are organised gangsters, a form of capitalism known in Sicily.
    Banks repossession of homes is organised: repossess the home for the slightest default, sell the homes by auction below the market value, and organised groups, mainly Asians, come forward and buy the properties in cash.
    It is also another example of the failure of regulation, as I have stated before. The regulator can step in and force the banks to restructure the loans: introduce a payment holiday; interest-only repayment; or give the borrower time to sell up and down size.
    There is also another scam the banks run. When taking out a mortgage they force borrowers to also take out a mortgage indemnity guarantee a form of insurance in which the borrower pays the policy but the beneficiary is the bank. Usually it is for about 75 per cent of the loan, so on default the bank claims on the policy.
    That means they have 75 per cent of the loan up front, then they repossess the home and auction it for anything from the remaining 25 per cent to the gangsters. MIGs are outlawed in Britain.
    I know this because years ago I asked about a loan from a Broad Street bank and when the young woman told me I would have to take out a MIG I told her what to do with her loan. But then again that was not a loan for a family home. Again poor regulation.
    Much better would be if the government force the lenders to impose an income protection policy and term assurance on the loans. It means that if the borrower loses his/her job the income protection would kick in and pay the mortgage for the next six months.
    With term assurance, if the borrower were to take ill, a stroke, for example, or dies, the term assurance would pay the outstanding amount on the loan. Term assurance reduces with the loan.
    Government could make it compulsory for lenders to add income protection to loans; after all, they do it on motor insurance, in particular third party liability, and no one complains.
    We need good financial regulation and supervision. We need the opposition political parties to say now on the record what change they would introduce if elected. We need our retired bankers to speak out.

    Like

  9. Well Well & Consequences Observing Blogger July 3, 2017 at 4:48 AM #

    The Black governments are not interested in making any fair and equitable laws for the borrowers, if there is a foreclosure, they are interested in getting the propertyies at a bargain for themselves, family and friends…a very selfish and disgusting bunch of cretins, they are not interested in helping homeowners keep their properties or their families tigether, they prefer see people homeless.

    Like

  10. Ali Baba July 3, 2017 at 6:04 AM #

    open letter to who? anybody that associates themself with degenerates, can’t be any better…..look how things change… hummmm this is highway robbery….miss cole the slaves in parliament like it so…even some of them may have benefited from this wickedness

    Like

  11. Vincent Haynes July 3, 2017 at 8:32 AM #

    This country should enact legislation like some of its Caribbean neighbours preventing foreign ownership of land.Land should be leased on an up to 99 year basis again like the other islands 25/50/99 year leases with the option to sell of the remainder if/when desired.

    Like

  12. Hal Austin July 3, 2017 at 8:36 AM #

    This is the second time that Heather has tried to engage Barbadians about the bad behaviour of the foreign-owned banks and the second time that Barbadians prefer to discus cricket, the legitimacy of Mia Mottley’s qualifications and the make of the prime minister’s car.
    Is this because matters of bad banking – one reason for the lack of enterprise in Barbados – is not important, a collective ignorance of the role of banking in development and the building of household wealth, or that we cannot concentrate, some form of attention deficit?

    Like

  13. fedup July 3, 2017 at 8:39 AM #

    True.

    Like

  14. Vincent Haynes July 3, 2017 at 8:51 AM #

    Hal

    What is there to discuss about the banking situation in Bim?

    The regulatory body of banking the CB has relinquished its authority and is allowing the banks to do as they please.

    The CB falls under the authority of the MoF,hence the cabinet and the Primer inter pares,who we all know does and says nothing.

    Tell us exactly how are we going to change the above structure and regain control of the banks in Bim?

    Like

  15. Hal Austin July 3, 2017 at 9:08 AM #

    Vincent,
    The easy answer is that we have the best banking system in the world – once again punching above our weight.
    Or that we are so traumatised by the pompous foreign chief executives and junior economists masquerading as senior regional economists that we are easily impressed or we are so scared of losing our jobs and homes, that we prefer to remain quiet.
    Alternatively, we can pressure the political organisations to say NOW what they would do with the banking system to make it transparent and ethical; tell us now before the general election.
    In the meantime, we want a Barbados-domiciled bank, which the great economist, minister of finance and prime minister, Owen Arthur, sabotaged. A man whose knowledge of financial economics can be written on a single finger nail.

    Like

  16. Bush Tea July 3, 2017 at 9:21 AM #

    @ Hal
    A man whose knowledge of financial economics can be written on a single finger nail.
    ++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++

    Boss…ANYONE’s knowledge of financial (or any other kind of) economics can be written on a single fingernail….

    “Lotta Shiite….!!!”

    Like

  17. Bernard Codrington. July 3, 2017 at 9:43 AM #

    @ Hal Austin at 9:08 AM

    @ Bush Tea at 9 :21 AM

    Why do you fellows not allow Mr. Arthur to enjoy his retirement ? Do you think it is easy to keep up with a changing Financial system that requires theoretical physicists and high level rocket science mathematicians to go to Wall Street to sort out derivatives and counter-party participants etc. You are too disrespectful. LOL!

    Like

  18. Hal Austin July 3, 2017 at 9:46 AM #

    Bernard,

    Why doesn’t Mr Arthur quietly retire – along with lots of others who constantly talk about macroeconomics like sixth formers?

    Like

  19. Sargeant July 3, 2017 at 10:04 AM #

    @Hal A
    There is also another scam the banks run. When taking out a mortgage they force borrowers to also take out a mortgage indemnity guarantee a form of insurance in which the borrower pays the policy but the beneficiary is the bank. Usually it is for about 75 per cent of the loan, so on default the bank claims on the policy.
    That means they have 75 per cent of the loan up front, then they repossess the home and auction it for anything from the remaining 25 per cent to the gangsters. MIGs are outlawed in Britain
    +++++++++
    Are you sure that is correct? I would think that banks would want to protect their interests and demand that the borrower have insurance which indemnifies the bank in case of the mortgagee’s death prior to the repayment of the loan, the Bank can’t collect on insurance in case of default otherwise it would be bedlam for the Insurance companies and a windfall for the banks.

    Like

  20. Vincent Haynes July 3, 2017 at 10:11 AM #

    Hal

    Alternatively, we can pressure the political organisations to say NOW what they would do with the banking system to make it transparent and ethical; tell us now before the general election.
    ………………

    How can this pressure be applied?

    Like

  21. Hal Austin July 3, 2017 at 10:13 AM #

    Vincent,

    Is that a profound question or just one of your usual?

    Like

  22. Vincent Haynes July 3, 2017 at 10:21 AM #

    Hal

    As profound as can be…….we have been grappling with that question from the inception of BU as David alludes to frequently…..without an answer.

    Like

  23. David July 3, 2017 at 11:01 AM #

    We have to applaud Heather, she works her message in the social media space and she is off island..

    Like

  24. Crusoe July 3, 2017 at 1:16 PM #

    If you review previous posts, a few years ago I noted the need to address ownership / mortgage legislation to protect homeowners.

    Yes, I am saying ‘I told you so’.

    But the real question is, ‘why was nothing done’ to address the issue then.

    Like

  25. Vincent Haynes July 3, 2017 at 1:35 PM #

    Maybe the PM will listen to this.

    Like

  26. David July 3, 2017 at 2:38 PM #

    @Vincent

    Note the upper middle class to high crust Ronnie has been able to attract, similar to the Cahill crowd :-). You don’t upset these people.

    Like

  27. Hal Austin July 3, 2017 at 3:24 PM #

    Sargeant,

    I suggest you have a look at mortgage indemnity guarantees (MIGs) and the Financial Service Authority. That is precisely why it is outlawed in the UK. We had a long debate about it before the banks the in the towel. Bank are not social workers.

    Like

  28. Vincent Haynes July 3, 2017 at 4:00 PM #

    David

    The trouble with that grouping you mentioned is that he is preaching to the converted and if the govt continues not too listen they will leave the island.

    He needs to get the communities involved as well and I hope he will go around the country spreading the word in a language that will involve them such as community tourism,small business,agriculture,etc.

    Like

  29. David July 3, 2017 at 5:06 PM #

    @Hal

    Would it surprise you that Heather’s post is the most widely read and circulated today on social media via BU?

    Curious why you are against financial institutions asking the mortgagor to take out term/life insurance. The Barbados property market is not bullish, there is no formal secondary market -in fact Barbados is a very unsophisticated property market. How would credit unions?banks/Insurance companies holding a charge over properties safeguard the asset read realize the value God forbid there is a tragedy?

    You are correct that we need to hear from the BU intelligentsia on the topic. It is a serious one given the easy sub prime like access to loans in Barbados.

    Like

  30. Hal Austin July 3, 2017 at 5:21 PM #

    David,

    I am not surprised that Heather’s post is popular. Barbadian households are in serious debt crisis and losing their homes is the final straw. Plse re-read my posts again.
    There is a problem with understanding – you have previously called it a challenge. I am not against lenders asking borrowers to take out cover. In fact, if you re-read my contribution you will see I am saying the opposite. I have even suggested government should make it compulsory. Barbados is terribly under-insured.
    What I am against is mortgage indemnity guarantee (MIG) cover, which is dishonest and fraudulent, with the borrower paying the premiums and the lenders being the beneficiaries. That should be banned. I have called for income protection and term assurance.
    I suggest if you are not clear please ask for clarification, rather than put words in my mouth or mis-represent me. You have done it on a number of occasions recently.
    As to protecting lenders, simple: if borrowers cannot meet their commitments they will lose their homes – but after a process, including restructuring the loan, etc, and seeking civil court judgements before repossession. .

    Like

  31. Frustrated Businessman ready to shut down this country to force elections. July 3, 2017 at 5:22 PM #

    One of the first issues the Fair Trading Commission should have addressed upon its creation was a standard mortgage contract across all banks trading in Barbados that would allow the transfer of that mortgage from one bank to another bank without new legal fees which are, especially when dealing with ‘new builds’ extortionate and unwarranted.

    Until we can move mortgages without cost, there will never be fair trading between banks.

    Like

  32. Hants July 3, 2017 at 5:48 PM #

    @ David who wrote ” Note the upper middle class to high crust Ronnie has been able to attract “.

    Maybe they have come to the realisation that Barbados will not be a pleasant place to live if the economy gets any worse.

    They are all getting old and looking to the likes of Ronnie and Grenville.

    They could also emigrate to Canada…..as economic refugees. Ask Justin or Katherine eff yuh doan believe muh.

    Like

  33. David July 3, 2017 at 6:01 PM #

    @Hal

    You need to stop being so thinned skinned! BU did a check of all the websites of the banks in Barbados and could not find one asking mortgage customers to take out mortgage indemnity insurance. Can you provide the evidence to support your position?

    @Frustrated Businessman

    Agree with you and this is why we referred to the lack of a structured secondary market in to easily port titles,flip properties etc.

    Like

  34. Gabriel July 3, 2017 at 8:32 PM #

    I have dealt with banks and insurance companies on mortgages.Banks did not require an MIG but the insurance companies did.

    Like

  35. Bernard Codrington. July 3, 2017 at 8:37 PM #

    @ David at 6:01 PM

    In the interest of clarification.
    Mortgage Indemnity is a blanket insurance against certain risks of default paid by the mortgage finance institution. Like all bank expenses the customer indirectly pays for it. The preferred method in Barbados is either Term Insurance to cover the years to maturity of the mortgage and or full life insurance with the understanding that the bank will have first charge of the policy proceeds at death. It is in the interest of the householder to take out this insurance.

    If the borrower cannot afford these charges plus repayments maybe he should not take out a mortgage. He should save and then build.
    Please bear in mind that it is the deposits of small savers that is being lent out to borrowers and the bank has a duty to depositors to recover money lent out.

    Like

  36. David July 3, 2017 at 8:54 PM #

    @Bernard and Gabriel

    Thanks, understand the risk covered as explained. Just don’t understand the smear Hal is painting it. Not sure if we are missing something.

    Like

  37. Hal Austin July 4, 2017 at 3:39 AM #

    David,

    MIGs are sometimes called other things, but the purpose is the same. Insurance companies do not demand the product, the lender does. The borrower’s agreement is with the lender, not the insurance company. Insurance is what we call an add-on.
    I am not sure @David why you seem to be so hostile: first you claim I am thin skinned; why I cannot imagine; then you say I ‘smear’ MIGs. All |I said was that they were dishonest which is the reason they are banned in the UK.
    I suggest you read the arguments for and against on the Financial Services Authority website and not just go on lenders’ websites in Barbados. Even better, apply for a mortgage and see what they lenders demand from you.
    @David – Banks in Barbados get away with murder because the opinion-formers themselves do not understand the products nor do the regulators. That is why good regulation entails the regulation of products. Consumers must be saved from themselves. If you desperately want aa mortgage and the lender tells you to pay an extra premium, most borrowers will say yes please. Good regulators step in to prevent this customer abuse.

    Definition: A single premium insurance policy, paid for by the borrower prior to completion of the mortgage is called a Mortgage Indemnity Guarantee (or MIG, also known as a higher lending charge). It insures the lender for losses in excess of (usually) 75% of the loan-to-value sum. The borrower still remains liable for any amount claimed, so the insurer can recover the sum paid out under its power of subrogation.

    Like

  38. Hal Austin July 4, 2017 at 3:54 AM #

    An insurance premium sometimes required by a mortgage lender if you are borrowing more than a certain percentage of the value of your home – usually 75%. The idea is that if the value of the property falls beneath 75% of the original valuation for any reason, the insurance will pay out. In the unfortunate event that that happens, the insurance company will usually pursue you for the amount they paid the lender, even though you paid the premium yourself. Shop around – some lenders do not require mortgage indemnity insurance.

    Like

  39. Hal Austin July 4, 2017 at 3:59 AM #

    Mortgage Glossary: Mortgage Indemnity Guarantee (MIG)

    Mortgage Glossary

    Mortgage Indemnity Guarantee (MIG)
    This is an insurance policy designed to protect the lender (the mortgagee) against loss in the event of you defaulting and ceasing to repay your mortgage. The policy may be insisted on by the lender at the start of the loan, but it”s usually the borrower (the mortgagor) who pays the premium!

    Some mortgage lenders have in the past been criticised for not explaining clearly enough that the policy is for their benefit, not that of the borrower. The premium payable is determined by the level of perceived risk to the home lender of you defaulting on the loan. In such circumstances, the lender would repossess and sell the property, possibly at a loss.
    So for example, if the property you”re buying is valued at (say) £100,000, the lender may demand you take out indemnity insurance if you”re borrowing more than (say) 75% of its value. So a home loan of £80,000 representing 80% of the property”s value will leave you with an indemnity premium to pay. If you choose to borrow £90,000 (90%) of the loan, there”s deemed to be a greater risk to the lender of financial loss, so the premium payable by you will be higher. Similarly, if you”re looking for a 100% mortgage (and are lucky enough to find one available on reasonable terms), the chances are you”ll then have to pay a hefty indemnity premium! These premiums are based on the percentage you wish to borrow above a certain threshold set by the lender.
    Indemnity premiums are typically charged at up to 8% of the amount of the loan being advanced over the threshold. So, for example a 100% loan of £100,000 with a MIG threshold of 75% might have a MIG premium of £2,000 (£25,000 x 8%). Such premiums may be paid as a “one off” or added to the mortgage advance. Because many borrowers have not understood what these premiums are for, the Council of Mortgage Lenders (CML) has instituted a voluntary code which asks its members to provide a written explanation to borrowers of what this policy is. Some lenders now make a point of not charging MIGs.

    Mortgage Glossary

    Get professional help from a qualified independent mortgage advisor and see how much you could save on your mortgage payments. There’s no obligation, just plain good advice.
    See also: Financial Services, Mortgages

    Like

  40. Artax July 4, 2017 at 5:05 AM #

    Gabriel July 3, 2017 at 8:32 PM #

    “I have dealt with banks and insurance companies on mortgages. Banks did not require an MIG but the insurance companies did.”

    @ Gabriel

    I don’t know if it still happens, but Sagicor’s mortgage financing was up to 95% of the cost to construct or the appraised market value of the property if the borrower had mortgage indemnity insurance or guarantee insurance.

    Like

  41. David July 4, 2017 at 5:46 AM #

    @Hal

    Not hostile at all. We are debating the issue. Agree though that BU is not your Sunday school.

    Like

  42. Hal Austin July 4, 2017 at 6:06 AM #

    David,
    It is nice to know we are debating. We must not give too much credence to those who misunderstand when the lender is acting as agent for the insurance company or are even self-insuring (ie when the MIG premium is added to the mortgage).
    Borrowers re being robbed because of poor regulation. Let us focus on the amateur financial regulation which is penalising people.

    Like

  43. Bush Tea July 4, 2017 at 6:50 AM #

    Still trying to understand Hal’s point of concern….

    You have no money, but want to buy a house via a loan from me….
    I have no guarantee that you will be able to complete your commitment, …so I require that you take out insurance which covers my liability in the event that you should fail to keep your commitment.

    This insurance is obviously at YOUR expense…

    Is Hal suggesting that, should a borrower default on his mortgage, the insurance should settle with the bank and let the defaulter keep the property….?

    Like

  44. Hal Austin July 4, 2017 at 7:16 AM #

    Bush Tea,
    No I am not. You are finding it a bit challenging. You do not understand MIG and I suggest you should keep quiet and learn. If the borrower defaults on the loan the lender can repossess the property. It is a secured loan which is why the lender holds on to the documents until the loan is paid in full. What I am saying, and it is a simple insurance law principle, the person paying the premium on the MIG should be the beneficiary. Apart from business insurance, in which the key person cover etc in which the person who is covered (and who does not pay the premiums) is not the beneficiary there are few exceptions to this.
    In other words, if you are the proprietor of a garage and you have a senior mechanic on which the business depends, you take out key person insurance; the idea is if that person leaves you would have insurance to cover any losses and to hire someone of equal technical ability.
    I won’t repeat my argument, read the postings or/and go on the Financial Services Authority website for details of the year-long argument we had in the UK over the product. By the way, a mortgage is a derivative.
    I will end on this point: when the lender can claim on the MIG and yet repossess the property, there is perverse incentive to sell the property below the market value. That is robbery.
    If the property was sold at market value, which in most cases would be above the outstanding balance (mortgage – MIG payment) then any access should go to the borrower ie the increased value of the property. But because there is a Mafia in which the lenders collude, they rob the borrower.
    In truth, the argument is not that challenging to send me digging for my books on mortgage law, especially when I know I got it right. You either accept what I have said, or not.

    Like

  45. Artax July 4, 2017 at 7:50 AM #

    “We must not give too much credence to those who misunderstand when the lender is acting as agent for the insurance company or are even self-insuring (ie when the MIG premium is added to the mortgage).”

    Hmmmmm……………

    If the Financial Services Authority was/is a quasi-judicial body responsible for the regulation of the financial services industry in the United Kingdom, how would reading the information from its web-site confirm anything that pertains to Barbados, unless that information is applicable to Barbados, or is the author is using it as a guideline to demonstrate what should be standard mortgage regulation here?

    Like

  46. Hal Austin July 4, 2017 at 7:52 AM #

    Artax,
    The arguments are universal. I think I understand about judicial sovereignty.

    Like

  47. David July 4, 2017 at 7:57 AM #

    @Hal

    This discussion is shifting all over the shop. In a nutshell banks and credit unions usually ask for assignment of insurance policies- usually term- to cover replaced value in the event of death by the mortgagor. If you want to refer to t as mortgage indemnity so b it.

    Like

  48. Artax July 4, 2017 at 8:14 AM #

    I agree with you David.

    It is true that banks may often ask the mortgagor to have a life insurance policy as a mortgage requirement as part of security for the loan, because if the mortgagor unfortunately dies, the bank/financial institution would apply the insurance benefit to the loan and release the property to the mortgagor’s dependents.

    However, the law firm of “Clarke, Gittens, Farmer Attorneys at Law” advise that before the mortgagor hands over the policy to the mortgagee, he/she should make sure his/her estate is beneficiary on the insurance policy. According to them, “If it is a child or spouse, it creates a trust which takes precedence over the assignment.”

    The law firm also gives the following advice relative to property insurance:

    PROPERTY INSURANCE POLICY
    • If you do not already have a policy, apply for one as soon as possible, as it may take a few weeks to obtain.
    • Your bank’s interest as mortgagee must be noted on the policy which should be paid up and in force.
    • When negotiating your commitment letter with the bank, make sure you are not being asked to insure for a value that includes the land as even if you over-insure, you will only get the actual cost to re-build in the event of damage.

    Like

  49. Hal Austin July 4, 2017 at 8:26 AM #

    David,

    Term assurance is not the same as MIG. Lenders cannot force borrowers to take out life cover. A mortgage is a secured loan, the lenders have the documents and if there is default they can repossess the property.
    Life cover, term cover or income protection are forms of insurance that the borrower can/must do as an individual. If I had a mortgage my lender would not be able to force me to have life cover in which they are the beneficiary. Any beneficiary from my life insurance must go to my next of kin, not a mortgage lender.
    Term assurance is for the duration of the mortgage and reduces as it is paid. The beneficiary is the policyholder, not the lender. With MIG the beneficiary is the lender, although the premium is paid by the borrower.
    I hope you guys are getting this wrong, if not financial services in Barbados are like a jungle, a load of gangsters on the one hand, and regulators, politicians and borrowers ignorant of the products on the other.
    I go back to what I have been saying for years: our politicians like being involved in the execution of policy, no matter how ignorant (I experienced this with Kellman in a meeting at the high commission in London some time ago), the regulators are not properly trained and the clients/customers are paying a huge price for their ignorance. Bring in outside regulators, who will train locals.
    Where are our media. Have they forgot their role as educators.

    Like

  50. Hal Austin July 4, 2017 at 8:33 AM #

    David,
    We are all experts now. That is why I say don’t trust experts. If lenders ask a borrower to take out life insurance, that can be treated as advice – and good advice at that – but not a condition of the loan. You do not have to agree.
    However, the lender may and would ask for home insurance, which is different. Home insurance is the home equivalent of third party motor insurance. If the property is damaged or a third person is injured on the property, then you are covered. And, then the lenders can only compel that during the period of the loan. Once you have paid your mortgage that compulsion ends. It is also the home owners’ right to take out or reject contents insurance.
    MIG is different, it is a scam.

    Like

  51. de pedantic Dribbler July 4, 2017 at 8:34 AM #

    @Hal, you are either thin skinned per the blog master or insufferable per your above riposte to @BT. Oh heavens to murgatroyd!

    In your sophisticated financial markets the execs implemented this said MIG and according to you, in London debated it for over 365 days before banning it. Are we to understand from that they were ‘ignorant’ of what exactly was proposed or simply there was a desire to squeeze more revenue from an already contrived market disadvantageous to the lender.

    Maybe you can channel the other BU experts like Jeff and use wit and pithy quotes to blunt the incoming ordinance. Or is thin skinned n insufferable just a part of your St.Giles DNA. LOLL.

    But good reading. Incidentally for all your broadside re local regulatory deficiencies (valid tho they be) you surely know well the various regulatory ‘holes’ and deficiencies which facilitated the various debacles about which your paper filled it’s pages!

    Not to mix subjects or metaphors but the backlash of details coming from the Grenfell tragedy is another example of a so-called sophisticated market acting as blatantly crass, corrupt and negligent based principally on greed as any third world pissant country. In cases like that the culpable sophisticates deserve that guillotine the Pacha loves to invoke.

    Like

  52. Sargeant July 4, 2017 at 9:36 AM #

    Let me try to inject a bit of clarity? Into the discussion. A rereading of Hal’s initial submission and his subsequent follow ups reveal that some of us (myself included) may be speaking about two different things. Hal is speaking of Mortgage Default Insurance which the lender normally requires if the borrower has a small amount for this transaction (let’s say 10%) to contribute to the purchase/construction of a home. In that scenario if the borrower defaults, the Mortgage holder (let’s say the Bank) can apply to the insurance to pay the balance of the mortgage. The Insurance company can then sell the property to satisfy the mortgage holder and it will be responsible for any shortfall (if the home sells for less than the outstanding balance) and pay any excess to the homeowner. In all cases the Default Insurance amount is a lump sum payment and included in the Mortgage which could add considerable amount to the Mortgage over its lifetime.

    The requirement to have Mortgage Default Insurance may be waived if the borrower has 25% or more (the percentage may be more or less depending on ones jurisdiction) but I would think that because Barbados has mostly Canadian Banks they would apply the 25% rule currently in existence in Canada.

    Borrowers may be wise to take out term insurance to cover the life of the Mortgage or Mortgage Insurance to protect their love ones from being shown the door in the event their demise would mean loss of home.

    Like

  53. David July 4, 2017 at 10:18 AM #

    Thanks Sargeant, agree we all went down another path. Here is what is says on the CIBC website. One gets the impression that the customer has the option to go elsewhere because it is not a widespread requirement in the market. Will have to check it out.

    https://www.cibc.com/fcib/insurance/home.html

    Like

  54. Artax July 4, 2017 at 10:21 AM #

    @ Sargeant

    Hal Austin’s perspective on the issue would be much clearer if he could try as hard as he possibly could to resist including derogatory and sarcastic remarks about other contributors who may understand or agree with him, because he believes he is intellectually superior and us folk in Barbados are backward.

    He needs to change his attitude.

    Like

  55. Bush Tea July 4, 2017 at 11:03 AM #

    @ Artax re Hal…
    He needs to change his attitude.
    ++++++++++++++++++++++++++
    Why…?
    It would then not be Hal…..
    He has always been defined by exactly that attitude… at least from school.

    What would help is if he admitted his general ignorance of realities on the ground in Barbados. His insistence that whatever pertains in his adopted English plantation applies in our (in his mind) colony…. is becoming quite irritating…

    …but for Hal that is how the cookie crumbles.

    Like

  56. bajans July 4, 2017 at 7:01 PM #

    Thanks Sargeant. In Canada the CMHC insures those with small down payments. The purchaser is always advised to buy mortgage insurance to the value of the mortgage in case of death. A Bajan here in Ottawa had mortgage insurance. When his wife up and died two years after marriage with no children he was home free with clear titlew. It was a fairly large house to boot.

    Like

  57. Vincent Haynes July 8, 2017 at 7:42 AM #

    Hmmmm……and then…..
    NSRL better than lay offs, says Stuart
    Prime Minister Freundel Stuart says he understands the cries of residents and businesses alike over the $542 million austerity package announced by Minister of Finance Chris Sinckler in his recent Budget. However, speaking on the sidelines…
    barbadostoday.bb
    https://www.barbadostoday.bb/2017/07/08/nsrl-better-than-lay-offs-says-stuart/

    Like

  58. Alvin Cummins July 14, 2017 at 6:52 PM #

    Heather et al:
    “…should not be owners of land in Barbados.”
    People, welcome to the world go Capitalism. Operating in a free market like Barbados, unless restrictions are made on the ownership of property; which is protected by the Constitution, then anyone from wherever have the protection to purchase any property they desire. Barbados is not a dictatorship. When a contract is signed; as in the case of a purchase, and the exchange of money, the terms of the contract must be adhered to. Thus a person signing a contract (mortgage) to purchase, must adhere to the terms of the contract, which provides for foreclosure in the event of default. A person, in anticipation of difficulties in adhering to these terms, can aooriach the lending institution and negotiate better terms. A bank does not “force” anyone to accept their terms. these are subject to negotiations. The BANKS NEED TO LEND, SO THE BORROWER CAN NEGOTIATE , OR SEEK ANOTHER INSTITUTION THAT WILL OFFR BETTER RATES AND TERMS.
    HEATHER, YOU SHOULD HAVE LERNED FROM THE RECENT WORLD WIDE FINANCIAL MELTDOWN. HOW MNY THOUSANDS OF PEOPLE ALL OVER NORTH AMERICA WERE FORECLOSED UPON? GOVERNMENT CANNOT provide the type of coverage and protection that you seek to make them provide. The individual has the responsibility to live within his means; which includes provision and foresight for downturns in the economy. The days of a job for life; in Government or private, are over.

    Like

  59. millertheanunnaki July 14, 2017 at 7:58 PM #

    @ Alvin Cummins July 14, 2017 at 6:52 PM
    “People, welcome to the world go Capitalism. Operating in a free market like Barbados…”

    So why are you so much opposed to “Privatization”? What would be so wrong should the GAIA be sold or leased on a long-term basis?

    “The days of a job for life; in Government or private, are over.”

    Is this a contrite acceptance of things to come in the coming months?

    You have fired some of the cleaners, maids and gardeners who used to keep Barbados clean and attractive, now is the time to shed some of the real fat; aka excess to ‘superfluous’ requirements in the middle and top of the parasitic army of bureaucratic occupation.

    Why not fire some the butlers (hanger-ons), incompetent accountants, pseudo lawyers, apologetic parliamentary secretaries and obese ministers mainly without any substantive portfolios?

    Like

  60. Hal Austin July 25, 2017 at 2:19 AM #

    Now that Barbadians have discovered the power of mass movement, and the positive significance of the private sector and unions working together, can we now expect a joint attempt to bring banks in to line, given that the banks are enemies, not of the state, but of consumers and small businesses?

    Like

  61. Bush Tea July 25, 2017 at 4:53 AM #

    Oh buzz off Hal
    ..are you no longer afraid of the RSS?

    Like

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