{"id":17945,"date":"2012-02-13T09:22:13","date_gmt":"2012-02-13T14:22:13","guid":{"rendered":"http:\/\/www.bahamasb2b.com\/news\/?p=17945"},"modified":"2012-02-13T13:42:12","modified_gmt":"2012-02-13T18:42:12","slug":"disaster-looming-for-mortgage-corp-and-the-economy","status":"publish","type":"post","link":"https:\/\/www.bahamasb2b.com\/news\/2012\/02\/disaster-looming-for-mortgage-corp-and-the-economy","title":{"rendered":"Disaster Looming For Mortgage Corp. And The Economy"},"content":{"rendered":"
\"\"
Duane Sands<\/figcaption><\/figure>\n

The Bahamas Mortgage Corporation (BMC) is at risk of becoming insolvent, and if it does, it will take the whole country down with it.<\/p>\n

Its chairman, Dr. Duane Sands, said for too long Bahamians have viewed the corporation \u201cas a donkey to ride\u201d. He revealed to Guardian Business the latest numbers that chart a possible collapse in the housing market.<\/p>\n

As of January 2012, Sands reported a sinking fund deficit of $92.7 million. Between now and 2020, he said $21 million worth of bonds are set to mature. And from 2021 to 2030, a whopping $115 million worth of bonds must be paid out to investors, not including interest.<\/p>\n

Considering BMC earns $2 million per month, Sands told Guardian Business that based on current trends, the corporation will collapse when it comes time to pay the piper.<\/p>\n

\u201cSo many people thought we would never reach judgment day,\u201d the chairman said.<\/p>\n

\u201cFor all intents and purposes, we have been running a Ponzi scheme. My position is we have to acknowledge where we are because of the decisions we have made. We can scream and shout about how we got here, but we are here.\u201d<\/p>\n

The chairman\u2019s story on how BMC arrived here begins in early 1997 and spans until 2007. The corporation took part in a \u201chuge explosion\u201d of housing, with 1,300 homes built during this period of time.<\/p>\n

\u201cThe problem is it was done by accruing huge amounts of debt and increasing the exposure of the mortgage corporation,\u201d Sands explained.<\/p>\n

As the boom continued, it became less and less likely BMC could repay these debts once the music stopped.<\/p>\n

BMC issued large numbers of bonds, he said, to pay for the loans and take care of the interest. Sands called it \u201can environment of fiscal indiscipline and chaos\u201d, to the point where the corporation had to constantly ask if the banks have any deposits to share.<\/p>\n

Based on this legacy, Sands told Guardian Business the corporation is presently $117 million behind where it ought to be.<\/p>\n

\u201cOne of the things that is very clearly to me, is Bahamians have looked at the Mortgage Corporation as a donkey to ride. That means, most people looked at it as a place where they could get money without consequences,\u201d he said.<\/p>\n

The chairman explained his office has endeavored to look at the fiscal realities with honesty and transparency. Scanning the dozens of foreclosures appearing in the newspapers on any given day, he said The Bahamas must now deal with this crisis much like the U.S. has been forced to grapple with the sub-prime housing crisis.<\/p>\n

One area of concern, Sands said, is the need to right the size of valuations for mortgages. Millions of dollars worth of assets are still on the books that long went into default.<\/p>\n

\u201cBut if assets are in default, you have to write them off,\u201d he said.<\/p>\n

The current situation is hardly business as usual, he added, and the approach of mass foreclosures by financial institutions cannot continue in a conventional sense.<\/p>\n

\u201cThe decisions made then were unfortunate,\u201d he said. \u201cIt was one big party. As you look through these reams of foreclosures, the question is should it be business as usual or a different strategy.\u201d<\/p>\n

Source: The Nassau Guardian<\/p>\n","protected":false},"excerpt":{"rendered":"

Due to years of corruption and abuse the Bahamas Mortgage Corporation is at risk of going bankrupt, which would mean a collapse of the housing market and a major crash for the whole country.<\/p>\n","protected":false},"author":25,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"rop_custom_images_group":[],"rop_custom_messages_group":[],"rop_publish_now":"initial","rop_publish_now_accounts":{"facebook_10223285771444175_51037792744":""},"rop_publish_now_history":[],"rop_publish_now_status":"pending","footnotes":""},"categories":[12],"tags":[29,98],"class_list":["post-17945","post","type-post","status-publish","format-standard","hentry","category-headlines","tag-economy","tag-financial"],"_links":{"self":[{"href":"https:\/\/www.bahamasb2b.com\/news\/wp-json\/wp\/v2\/posts\/17945","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.bahamasb2b.com\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.bahamasb2b.com\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.bahamasb2b.com\/news\/wp-json\/wp\/v2\/users\/25"}],"replies":[{"embeddable":true,"href":"https:\/\/www.bahamasb2b.com\/news\/wp-json\/wp\/v2\/comments?post=17945"}],"version-history":[{"count":0,"href":"https:\/\/www.bahamasb2b.com\/news\/wp-json\/wp\/v2\/posts\/17945\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.bahamasb2b.com\/news\/wp-json\/wp\/v2\/media?parent=17945"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.bahamasb2b.com\/news\/wp-json\/wp\/v2\/categories?post=17945"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.bahamasb2b.com\/news\/wp-json\/wp\/v2\/tags?post=17945"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}