In a letter to Speaker Eli D. Cabrera, R-Saipan, Reps. C. Froilan Tenorio, Covenant-Saipan, and Stanley T. Torres, Ind.-Saipan, Camacho said the government can “save” homeowners reeling from reduced work hours and rising costs of fuel and consumer goods.
Camacho said, “The Marianas Public Land Trust and the Northern Mariana Islands Retirement Fund can offer to buy out residential home mortgages from private creditors in the NMI. The two agencies may infuse more capital locally and invest in our real estate home mortgage market by creating a secondary market for lenders to sell loans and have access to capital.”
He also asked for reduction in interest rates and restructuring of debts owed by homeowners to create a stable home mortgage real estate market on par with local purchasing powers and mitigating the adverse effects of the restrictions on land ownership by non-NMI descents.
He suggested a directive from the governor or legislation that will direct, convince, or order the Northern Marianas Housing Corporation, Retirement Fund’s home loan program, and MPLT to reduce the interest rates to 2 percent and have servicing agents restructure the loans to accommodate repayment plans for homeowners who are having difficulties with their home loans.
He told Variety he asked the Legislature in 2009 to help homeowners from losing their homes.
“We were wrestling with the runaway accrued interests and we had arrested some of the worst loan conditions via a debt relief program,” said Camacho.
He shared his plans with the legislators that will continue efforts to borrow low interest funds and apply for grants to make them available to the CDA clients.
Camacho said CDA showed that the foreclosure process is a tedious and difficult process and neither borrower nor lender benefits from it.
“One of the best ways to directly assist borrowers is to lower the interest rates on loans,” he said.
Though majority of the these loans are administered by private lending institutions, Camacho said such agencies as MPLT, CDA, and the Retirement Fund hold significant home loan portfolio.
Although the government is broke, Camacho said through the government agencies, it can buy loans from private creditors.
CDA, Camacho said, has reduced interest rates to 2 percent and restructured terms up to 30 years through its debt relief program.
According to Camacho, the Retirement Agency and MPLT may be encouraged to go an extra mile.
He said MPLT has a substantial liquid capital that it could leverage.
“If it does not want to withdraw its investments from the stock markets for fear of losing 9 percent earnings or returns on investments, then why not leverage its assets by borrowing and pledging its investments as security,” said Camacho.
These agencies, Camacho believed, can be convinced by the governor and the legislators through a directive or legislation to centralize investments in homeownership.
“The Legislature and the administration can take a proactive approach and convince the agencies that it makes perfect sense to invest in ourselves, invest in our peoples, invest here and give our businesses opportunities to have access to new capital.”
Camacho further suggested that MPLT can direct its investments to buying up all the real estate loans in banks. “If MPLT could restructure its existing loan portfolio with 2 percent interest rates and waiving all accrued interest then it could do the same with all the loans out there held by banks in the CNMI.”
He said buying loans from CNMI banks infuses capital into the lending institutions here, thus, making them available for new private sector lending and increasing the tax base.
For Camacho, taking bank loans, restructuring them with new terms and lowered monthly payments and reducing interest rates to 2 percent bode well for a healthy real estate market.
According to CDA’s loan manager, the 2 percent interest rate offers multiple benefits: borrowers will be able to afford to pay their loans; the NMI general fund will be receiving additional interest incomes from new stream of loans; banks have additional funds to loan out; MPLT investments are allocated closer to home and avoid risks with investing in the stock market; and mass foreclosures will be avoided, resulting in a stable real estate market in the commonwealth.
Currently, an average borrower pays $800 to $1,000 monthly payments for home loans at 8.5 to 9 percent with others even higher.
“The current economic conditions of the CNMI cannot support the current repayment structures of most of the loans that originated back then when economic conditions were far superior and robust than what we have now,” Camacho said.
