NMHC gets U.S. nod for 20 mortgage insurance slots

In what could be a major push to the CNMI government’s housing program, the Commonwealth Development Authority has successfully negotiated for at least 20 mortgage insurance slots with the United States Department of Housing and Urban Development.

The 20 slots secured from the HUD represents a significant improvement in comparison to the initial implementation of the program in the Northern Marianas when only one home mortgage insurance was issued by a local bank.

The Memorandum of Agreement between the Northern Marianas Housing Corporation and the U.S. government’s HUD for the mortgage insurance slots is expected to be formalized within the year.

Rep. William S. Torres said the CNMI may have managed to get a commitment from the HUD for the federal insurance program since the island’s first recipient continues to enjoy its benefits unperturbed by any default.

“This clearly proves that this program can be effectively implemented here, irrespective of the fashionable and convenient claims against Article 12,” said Mr. Torres in a letter to CDA Board Chair John S. Tenorio.

He also commended the NMHC Board of Directors and management for revisiting the long dormant home mortgage insurance program that paved the way for the additional 20 slots guaranteed by the HUD.

“While the number of secured insurance certificates is a significant increase from the initial trial period issued years ago, the magnitude of housing needs in the CNMI, nonetheless, requires greater than 20 slots,” Mr. Torres added.

He pointed out that the CNMI needs to establish a prima facie case as an underserved area in order to strengthen the appeal to national agencies for the Commonwealth to avail of affordable housing and community development programs available at the national level.

CDA has initiated negotiations with two federal agencies to provide the necessary push in trying to encourage private banks into earmarking additional capital for long-term housing loans.

Mr. Tenorio previously said there is a slow but consistent growth in the agency’s housing loan program primarily because banking institutions have taken a backseat approach in the approval of credit packages for home acquisition.

He explained that terms for housing loans are normally stretched up to between 20 and 25 years, which private banks and other financing institutions find restrictive due to the absence of ample market in the Northern Marianas in case the property will have to be foreclosed.

In order to address the banking companies’ concerns on the absence of ample market for foreclosed properties, Mr. Tenorio said CDA is trying to bring in two federal financing agencies that deal directly to housing programs into the Northern Marianas.

He said that if CDA is able to bring the two agencies here, these will serve as secondary market which will buy the foreclosed properties from the banking institutions.

At present, CDA is working with the executive and legislative branches in urging the federal government to provide indigenous Northern Marianas residents easy access to private home financing.

A House Resolution has been eyed to strengthen the government-controlled lending agency’s efforts in encouraging private financing institutions to offer guaranteed home mortgage packages to local CNMI residents.

Mr. Tenorio explained that a backing from the HUD is anticipated to virtually eliminate the risks that go with the restrictions on land ownership in the Northern Marianas.

Three programs that are now being implemented by the federal housing department provide guaranteed home loan assurance to Native American-Indians, Alaskans and Hawaiians.

Section 184 or the Indian Home Loan Guarantee Program for Native Americans including Alaskans of the federal housing act is available to eligible borrowers on tribal trust.

FHA Section 248 is restricted to Native Americans wishing to purchase, build or refinance on tribal land trust, while Section 247 is limited to owner-occupants who are Native Hawaiians.