A lending program by the Northern Marianas Housing Corporation for low- and middle-income families has hit a snag after the Marianas Public Land Trust withheld funds until the end of the year.
MPLT trustees warned they may cut the entire $3.9 million loan extended in October to the housing agency to finance the program if the Legislature fails to amend or act on a legislative initiative it has strongly opposed.
In a letter to Rep. Dino M. Jones, chair of the House Natural Resources Committee, they said they have deferred final approval for the release of the money to NMHC, citing House Legislative Initiative 12-3 as main reason for their action.
The proposed initiative, under review by the committee, takes away MPLT’s ability to use its annual income distribution to the general fund as a source to pay off NMHC’s loan, according to the trustees.
“The loss of this source of repayment has caused the board to rethink its approval of an additional new loan to NMHC,” they wrote in the letter.
“The trustees have a fiduciary duty to make prudent investments; to do otherwise creates substantial personal liability to the trustees,” they added.
As a result of the introduction of HLI 12-3 in the lower house, MPLT has decided not to give the $3.9 million to the government housing corporation “pending determination of the final language” of the initiative.
“Only then can the trustees make a judgment of the total impact of the proposed constitutional amendment upon its operations,” they explained.
MPLT said the trustees are currently in a “wait and see” mode and have set December 31, 2000 as a deadline for an action time line regarding the NMHC loan.
If suggested changes are made by lawmakers to the initiative by that time, the trustees will give its final approval. If the Legislature fails to act on it, MPLT will be forced to reject the loan and remove it from their current consideration.
Gov. Pedro P. Tenorio has signed Public Law 12-27 to facilitate infusion of the money into the NMHC program which targets majority of the families on the islands hoping to build their own homes.
It came from the $10 million loan package MPLT granted in 1995 to the agency for its various programs. About $6.137 million have so far been used to pay approximately 120 mortgage loans given to local families.
Lawmakers enacted the legislation to allow the housing corporation to repay the debt through the annual revenues the MPLT divest into the local treasury.
Sponsored by Rep. Antonio M. Camacho, law authorizes repayment of the $10 million loan from the MPLT’s annual remittance of between $1.2 million to $1.4 million.
It also grants a 10-year moratorium to NMHC on its debt service to the government.
The move was prompted by appeal from housing officials who disclosed the agency’s loan portfolio cannot be sold to commercial banks due to the debtor’s inability to qualify for financing.
NMHC has also noted that many have asked for their help in terms of funding for building a house on parcel of lands provided by the Division of Public Lands which has threatened to revoke the homestead permits for non-compliance.
According to MPLT, the housing agency does not have the current financing to grant new loans to the significant number of applicants who wish to avail themselves of the program and who cannot make timely repayment of their loans.
Local officials are hoping that with the infusion of fresh funds in the housing sector, it will boost construction activities on the islands and help develop the economy amid the lingering crisis confronting the CNMI.