7 loans foreclosed By ALDWIN R. FAJARDO

Mortgaged property of at least seven business establishments that were not able to service monthly loan payment had been foreclosed by the Commonwealth Development Authority since the local economy started dipping in 1997 due to the Asian crisis.

Development Authority Chair John S. Tenorio said that although his office has diligently worked with local clients in order to restructure and revise existing loans, some businesses fell short of the capability to recover from the economic decline.

“There are businesses that we just don’t have any choice but to foreclose [the loans]. They just don’t want to take the initial steps in as much as we like to help them. In that case, we do foreclose the loans,” Mr. Tenorio said.

He said, however, that his office has been consistent in providing assistance to its clients, especially those who have approached CDA for help in the revision of their loans in order to prevent foreclosure.

He added that CDA is trying to minimize depriving a delinquent borrower to redeem a mortgaged property, explaining that foreclosure is not a very prudent practice especially since majority of the agency’s clients use land title as loan collateral.

“Right now, based on studies, to foreclose a business would not be a wise practice because the appraised value of the collateral or holding has tremendously decreased,” he pointed out.

Mr. Tenorio emphasized that the current value of the mortgaged property, when foreclosed and sold, would not be enough to cover for the total amount of the loans.

He said the value of the mortgaged properties, which were appraised in 1991 and in 1992 by professional assessors, has dropped by about 65 percent at present.

“So we try, as much as possible, to prevent foreclosure because the government would be at the losing end,” Mr. Tenorio told reporters, adding that CDA will continue to help distressed businesses in the islands.

CDA may be forced to do so, after all. Experts continue to paint a gloomy economic picture, worst, another recession in the CNMI which they expect to happen between now and the year 2005.

This is what analysts call giving more unrelenting stomps to a totally knocked out economy.

Economists said the subsequent decline in the local economy may be spurred by the turtle-paced recovery of the tourism sector and the eventual demise of the apparel industry which has now grown to become the largest private sector employer in the islands.

According to 1998 figures, the garment sector employs about 14,200 people, which is almost 50 percent higher than the tally recorded three years ago at 7,700.

However, when international trade quotas are finally lifted many people believe that the apparel industry on Saipan will finally relocate to Latin America and Asian countries in at least six to seven years.

This may be translated to the CNMI losing an average of 3,090 jobs per year, including 2,030 in the half-a-billion-dollar garment industry. This, even if the tourism industry would recover and grow at an annual rate of five percent between now and 2005.