New study for home financing eyed

The Commonwealth Development Authority has been asked to initiate a new home financing study to identify various housing and community development needs of the Northern Marianas.

Rep. William S. Torres said the new study, which will come as an update to the 1989 home development survey, should be inclusive and sensitive to the perennial goal of safe add decent housing for U.S. citizens.

“Making the study current, forward-looking and expansive is important in accurately forecasting the future housing and community development trends of the Commonwealth,” said Mr. Torres.

He added that the new approach facilitates an empirically based multi-income level projections of housing needs. “We must stave off tendencies for increasing gentrification of our public housing project.”

An updated study should dovetail with a determination of the quality and amount of financing needed for both public and privately owned housing projects for the next 20 to 20 years, Mr. Torres said in a letter to CDA Board Chair John S. Tenorio.

According to the congressman, a matching between client needs assessment, federal institutional requirements, local lending requirements and the government’s priorities and institutional capabilities should serve as guideposts in the assessment study.

Existing financing programs and institutional implementation procedures and processes must be re-examined for their effectiveness in meeting their intended goals and objectives, he pointed out.

“A cost-benefit analysis should be embedded in the review process,” said Mr. Torres, who has been advocating further improvement in public housing projects through assistance of concerned federal government agencies.

The call for a new home financing assessment study came on the heels of negotiations initiated by CDA in an effort to entice private banks and other financial institutions to intensify their long-term loan packages for housing projects.

This, even as some of the banking institutions in the Northern Marianas have already pledged to upgrade their respective portfolio earmarked for long-term housing loans but only up to a limited amount.

Private financial companies normally look at loan agreements that stretch up to 20-25 years as too risky, especially on the residential side due to prevailing impression that there is not enough market for housing units in the CNMI.

Commercial banks normally practice self-restriction on the infusion of more capital to residential credit packages because these are normally long-term that stretch from 20-25 years.

According to Mr. Tenorio, CDA managed to entice a good number of private financial institutions to go into long-term housing loans since the market trend has tremendously improved.

He said the usual terms given by banks on long-term loans is 12 years but added that nobody can afford a payment of at least $2,000 a month under this prevailing agreement.

CDA has also 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.

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.

The CNMI Constitution’s Article 12, which limits land ownership to residents of Northern Marianas descent, continues to get in the way in terms of encouraging private financing companies into intensifying their portfolio for housing loans.