Foreclosures And Jamaica

During the 2006’s Francis the expectant mother of three was teased into a sub-prime loan and moved into a new house. But to her horror she found that the monthly instalment was more than her income! The story of Francis is just one of many in this land of sun and shine. Shady house loans have led to a mushrooming of foreclosures. Hundreds of houses are being seized, entire blocs are being destabilized while real estate value is going down. The general economy is in shambles.

The abandoned houses give an eerie look to the neighbourhood attracting criminals and nefarious activities. Those untouched by foreclosures are afraid to continue living here – thus making the situation worse. It is tearing apart the socio-economic fabric of the island.

The movement has taken on racial undertones with pressure having been put on black owners to swallow these mortgages. More statistics are rolling in. Jamaica ranked first, second, fourth and fifth while Queen ranked third and sixth. Thus six areas had 133 new foreclosures during the third quarter. The story does not end here – there is more in the offing with hundreds of loans all ready to reset. Jamaica stood first amongst the high interest loan takers. Now it comes first in foreclosures.

For quite sometime Jamaica had enjoyed stability attracting middle-income blacks. Many of these held government posts. This meant a surfeit of senior citizens with a generous dose of equity on their houses. This fatness attracted the predators.

Another line of action was taken by crooked valuers who falsely raised the value of houses and took out loans more than what it was worth. Most of the people were ignorant about the complications of loans and were talked into dubious deals.

The racial factor cannot be ignored. A study shows that about 60% of the borrowers who had taken a sub-prime had the qualifications to opt for a prime traditional loan but they were not given the chance. Compared to whites more blacks have walked into the sub-prime nets leading to foreclosures. High commissions goaded the brokers and agents and so they aggressively wooed the hapless borrowers. The rising equity tempted them on to the path that ultimately led to foreclosures because they thought that equity could be translated into cash.

The present scenario is that lenders have tightened their belts but scammers are at work adding to the woes of those already facing foreclosures.

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