CDA, the CNMI government institution that provides loans and technical assistance to local businesses, stated in its latest audit report that bad debts and provisions for loan guaranty and foreclosed properties increased by 47 percent or over $2.6 million in value.
CDA declared a moratorium on new loans in 2005 due to high delinquency rate among borrowers.
“In 2006…bad debts and the provision for foreclosed real estate increased by $3,635,792 or 180 percent. The increase in 2006 also reflected the amount of the write-off of loans and the adjustment on the due to/due from on the [Northern Marianas Housing Corp.] loan and the transfer of $4,000,000 as per Public Law 15-1 for the Commonwealth Utilities Corp. emergency declaration,” the report stated.
The value of CDA’s loans receivable portfolio, after bad debts, for 2007 totaled over $10 million.
The amount reflected a slight decrease compared to 2006 as CDA said it implemented aggressive efforts to help borrowers settle their debt through various refinancing methods.
“As of Sept. 30, 2007, CDA’s loans receivable net portfolio was $10,094,223, which was a decrease of $1,131,885 or 10 percent compared to 2006….The cause of the decreases was due to the continuous effort of the loan department to provide loan servicing to all clients and to refer accounts that were 120 days in arrears to the legal counsel for litigation process,” the report said.
“The vast majority of the outstanding balances relate to loans that were initiated during the late 1980s and the early 1990s,” it added.
CDA foresees delinquent payments to continue due to the bad economy.
But the agency pledged to address this issue to ensure that local business owners in need of fresh capital are provided assistance.
