NMHC woos more banks to engage in mortgage lending

The Northern Marianas Housing Corporation has initiated discussions with two private banks for their possible participation in the institution’s mortgage lending program, in fresh efforts to improve access of CNMI residents to home ownership.

NMHC Manager Diana Crisostimo would not say, however, which of the commercial banks the housing corporation has been in discussion with, pending the signing of an official Memorandum of Agreement.

Ms. Crisostimo said NMHC has joined hands with BankPacific, Bank of Guam and Bank of Hawaii in making mortgage financing available to local residents who have expressed interest in owning a housing unit.

“We are now working with the three banks and we are currently in discussion with two more private banks to get into the mortgage lending program with the housing corporation,” Ms. Crisostimo said in an interview.

She pointed out that three commercial banks have started offering home loan services following a constitutional guarantee that they can foreclose and dispose of a property within a period of 10 years, in case the borrower defaults in payment.

Amendment 34 of the CNMI Constitution allows private lenders to hold and dispose of the property for 10 years from the date of foreclosure, Ms. Crisostimo explained.

“Because of this amendment, banks are now getting into the mortgage lending program with us because they realize that Article 12 isn’t an issue anymore. With this, they can foreclose and sell the property and get their money back as long as they do it within 10 years from they day the property was foreclosed,” she stressed.

Development Authority Board Chair John S. Tenorio said some of the banking institutions in the Northern Marianas have already pledged to upgrade their portfolio earmarked for long-term housing loans but only up to a limited amount.

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

He said 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.

Mr. Tenorio added that 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.