Delinquent borrowers face CDA foreclosure

Amid the increase in delinquency rate, the Commonwealth Development Authority will foreclose the properties of those who have continuously ignored to settle their loans with the government lending agency.

The CDA board has agreed to push through with the foreclosure proceedings after it has given up hopes to recover money from borrowers who have failed to meet their financial obligations, said Executive Director Marylou S. Ada.

Ms. Ada said the cash flow of the agency has been depleting at a fast rate thus, the need to collect payment to allow other loan applicants borrow money.

“We want to get those people who have not made a single payment or not made any initiative at all. This is a government entity and every citizen in the Commonwealth is entitled to borrow money. If some people are not paying then there are people who won’t be able to borrow money,” she said.

CDA has been very careful now in reviewing loan applications to curb further growth in the number of remiss credits, which currently account for more than 15 percent of CDA’s portfolio.

The government-owned lending agency has taken stricter measures in approving credit packages due to the slow-paced recovery of the Northern Marianas economy.

Ms. Ada noted that the delinquent borrowers were given enough time to show up and discuss with CDA how to settle their loans or make their accounts current.

“We are coming after them and that is the decision of the board. We will get those dead accounts and those who have not made any payments at all,” she added.

CDA Board Chair John S. Tenorio has consistently stressed that foreclosure of properties by delinquent borrowers is a last resort of the agency but that it may be forced to forfeit the properties of clients who have persistently failed to serve their payment terms.

Mr. Tenorio has expressed exasperation over the failure of these people to pay monthly amortization despite the fact that the lending agency has instituted flexible repayment terms. CDA has even helped borrowers restructure their loans to prevent foreclosure.

Delinquent borrowers are given 60 days to update their accounts. The legal counsel will then send a notice of default if the borrower fails to settle the financial obligation before the case is finally brought to court for judgment in favor of the agency.

CDA has stopped giving out loans to borrowers who intend to construct residential or commercial buildings since these are the biggest contributors to the agency’s current credit delinquency rate.

Loans extended to borrowers who ventured into apartment-type businesses comprise bulk of the delinquency rate reported by the CDA which reached about 15 percent last year.

As part of its technical assistance program, borrowers are asked to consult with experts from CDA for advise as to which business types will potentially fail and which are likely to succeed before submitting their application for commercial loans.